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LOS a, (Part 1): Define an efficient capital market.
Q1. If a firm announces an unexpectedly large cash dividend, the efficient market hypothesis (EMH) would predict which of the following price changes at the announcement?
A) An abnormal price change to occur at the time of the announcement.
B) No price change.
C) An abnormal price change to occur before the announcement.
Q2. Which of the following is NOT an assumption behind efficient capital markets?
A) Return expectations implicitly include risk.
B) New information occurs randomly, and the timing of announcements is independent of one another.
C) Market participants correctly adjust prices to reflect new information.
Q3. An efficient capital market:
A) fully reflects all of the information currently available about a given security, excluding risk.
B) does not fully reflect all of the information currently available about a given security, including risk.
C) fully reflects all of the information currently available about a given security, including risk.
Q4. Classifying a capital market as efficient is least likely to imply that:
A) stock prices adjust swiftly to new information.
B) corporate insider’s investment performance will consistently exceed the performance of other investors.
C) stock price changes are random and unpredictable.
Q5. Which one of the following is least likely an assumption of efficient capital markets?
A) Risk is included in the pricing of the security.
B) Market participants correctly adjust prices when new information is received.
C) There are a large number of participants that analyze and value securities independently of one another.
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发表于 2009-3-2 13:09
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