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In: Finance

An efficient market has which of the following characteristics? New information causes a quick price change...

  1. An efficient market has which of the following characteristics?

New information causes a quick price change followed by smaller price changes as the market adjusts.

New information causes a large price change followed by price changes in the opposite direction as the market settles down after the news.

New information causes a quick price change followed by random price changes.

New information is reflected in an unbiased manner in stock prices after several days.
  1. What does large stock price increases usually followed by stock price decline indicate?

An inefficient market

A market that is weak-form efficient

A semi-strong-form efficient market

A strong-form efficient market
  1. The expected return on a portfolio depends upon

Only the weight of each asset in the portfolio

Only the expected return of each asset in the portfolio

The probability of profitable investments and the expected return of each asset

The expected return and weight of each asset in the portfolio
  1. You have 25 percent of your funds in Stock A with an expected return of 5 percent, 60 percent of your funds in Stock B with an expected return of 7 percent, and the remainder in Bond C with an expected return of 3 percent. Which of the following is the expected return on this collection of investments closest to?

5.45 percent

5.90 percent

6.20 percent

6.41 percent
  1. Systematic risk is _____________ and unsystematic risk is _____________.

diversifiable, diversifiable

undiversifiable, undiversifiable

undiversifiable, diversifiable

diversifiable, undiversifiable

Solutions

Expert Solution

jeff jeffy answered 2 years ago
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