State whether the following are true or false. Explain your statement. A finding that small firms...

State whether the following are true or false. Explain your statement.

A finding that small firms earn higher returns than large firms would provides evidence against the weak form of the efficient market theory. (5 marks)
Proponents of the EMH typically advocate a passive investment strategy. ( 5 marks)

Expert Solution

1. The given statement is FALSE because small firm bias is a violation of a strong form of Efficient market, not the weak form of Efficient market.

Small company bias advocates that a small company will be earning higher return than large company but a strong form of Efficient market contradicts that. Hence it is in contradiction of the strong form of Efficient market because it advocates that all the privately and publicly available information have already been discounted into the stock price.

2. The given statement is TRUE because Efficient market hypothesis advocate that all the publicly and privately available information have already been discounted into the stock price so there is no possibility of additional rate of return and hence it is advocating passive investment by investing into the index.

Given statement is TRUE.

jeff jeffy answered 2 years ago

State whether the following statement is True, False, or Uncertain. Be sure to explain your answer....

State whether the following statement is True, False, or Uncertain. Be sure to explain your answer. The marginal propensity to consume from a permanent parallel upward shift in the production function is smaller than the marginal propensity to consume from a temporary parallel upward shift in the production function.

State whether the following statement is true or false AND explain why: "An increase in the...

State whether the following statement is true or false AND explain why: "An increase in the interest rate paid on excess reserves will always cause an increase in the federal reserve funds rate."

State whether the following statement is true or false and explain your reasoning. Protein tyrosine phosphatases...

State whether the following statement is true or false and explain your reasoning. Protein tyrosine phosphatases display exquisite specificity for their substrates, unlike most serine/threonine protein phosphatases, which have rather broad specificity.

State whether the following statement is true or false and explain: According to the IS/LM model,...

State whether the following statement is true or false and explain: According to the IS/LM model, an equal increase in government spending and taxes by $1bn cannot raise GDP by more than $1bn.

.Explain whether the following statement is true or false and state the correct answer explaination: 1....

.Explain whether the following statement is true or false and state the correct answer explaination: 1. Profit growth can be defined as the rate of return the firm makes on its invested capital 2. A joint venture is one firm licenses its intellectual property to another firm 3. Write different ways to enter a foreign market. If you were asked by a pharmaceutical company to design a market entry strategy, clearly showing which you would use and justify your choice...

Explain whether the following statements are TRUE or FALSE. State your stance clearly.

Question 1Explain whether the following statements are TRUE or FALSE. State your stance clearly.a) A positive term spread is indicative of economic recession. b) By reducing the required reserve ratio, the central bank can increase the monetary baseand thus the money supply. Question 2a) What is yield curve? Explain whether it can be downward sloping. b) If bond investors decide that 30-year bonds are no longer as desirable an investment asthey were previously, predict what will happen to the yield...

Please state whether each of the following statements is TRUE or FALSE, and then explain your...

Please state whether each of the following statements is TRUE or FALSE, and then explain your choice briefly. Please start your answer by writing either TRUE or FALSE. Answers without that clear statement at the beginning, and with excessively long (more than 2-3 short sentences) explanations will be penalized. Banks can still influence the money supply if they are required to hold all deposits in reserve. In the months of November and December, people in the U.S. hold a larger...

True or False. Indicate whether the statement is true or false. If false, explain in the...

True or False. Indicate whether the statement is true or false. If false, explain in the space provided the statement why it is false, or simply correct the statement. Smooth muscle contraction is regulated by the autonomic nervous system. During exercise, the sympathetic nerves that innervate the smooth muscles of bronchioles and arterioles regulate the contraction of these smooth muscles to increase ventilation and cardiac output. 2. Multiple choice: Choose one best statement. An infant born prematurely has neonatal respiratory...

State whether the following statements are TRUE or FALSE. Give the reason, If a statement is...

State whether the following statements are TRUE or FALSE. Give the reason, If a statement is true, explain why; if it is false, identify the mistake and try to correct it. Use the diagram for explanation if needed. (NOTE: Marks are based on your reasoning, not only for T/F marking) (i). Change in quantity demanded and change in demand are the same things. (ii). If the demand curve for good A is flatter, and if the demand curve for good...

State whether the following statement is/are true or false and justify your answer. (1) Statistics consist...

State whether the following statement is/are true or false and justify your answer. (1) Statistics consist of information that is collected from speciﬁc source on a topic of interest. (2) A population is a collection of items, individuals or elements. (3) Inferential statistics is the art and science of collecting, presenting and interpreting data. (4) A sample is a fraction or a subset of the population. (5) A qualitative variable is a variable that measures qualitative characteristics.

Question