Select an Answer: quickly and well. quickly but poorly. slowly but well. slowly and poorly.
Rationale:
Tests of corporate events have received substantial attention during the last few years. Studies have found that stocks react quickly to corporate events as one would expect based on the underlying economic impact of the action.
2025-04-24
Question: The weak form of efficiency implies that abnormal profits cannot be made using:
Select an Answer: technical analysis. non-diversified portfolios. inside information. public information.
Rationale:
The weak form of efficiency implies you cannot use information on past stock prices to make abnormal profits. Technical analysis tries to do precisely this by trying to find patterns in stock price movements.
2025-04-23
Question: The January effect:
Select an Answer: has not yet undergone significant academic study. has been resoundingly disproved by academic studies. has tended to be supported by academic studies. has tended not to be supported by academic studies.
Rationale:
Numerous studies have tended to find a January effect, and lend mixed support to a tax inspired explanation. Such studies have included those by Dyl, Roll, Keim, Rozeff and Kinney, and Chang and Pinegar.
2025-04-22
Question: Studies have shown that corporate insiders:
Select an Answer: earn below-average returns. earn above-average returns. earn rates of return that are impossible to measure well with currently available information. earn average returns.
Rationale:
That corporate insiders earn above-average returns does not support the strong-form EMH. This hypothesis contends that stock prices reflect all information, so no group can consistently experience above-average returns. That corporate insiders seem to do just that casts doubt on the theory.
2025-04-21
Question: Which of the following is a component of the risk premium?
I. Business risk II. Financial risk III. Liquidity risk IV. Exchange rate risk V. Country risk
Select an Answer: II and IV I, II, III, IV, and V III and IV I and II I, II, III, and IV
IV and V
III and V
Rationale:
The risk premium is comprised of each of these components which are influenced by differences in the general economic and political environment as well as differences in trade relations and operating leverage employed within a country. After each of these components is analyzed, a unique risk premium may be assigned to a country.
