8. (A) True/False Explain: According to the basic stock valuation model, the value an investor assigns...

8.

(A) True/False Explain: According to the basic stock valuation model, the value an investor assigns to a share of stock is dependent upon the length of time the investor plans to hold the stock.

(B) True/False Explain: When markets exhibit semi-strong form efficiency, balance sheet information and other public information can be used to help forecast prices/returns, however past prices will be of no help.

(C) True/False Explain: Many analysts correctly predicted that the stock market would decline in the first half of 2001; this violates semi-strong form efficiency.

Expert Solution

(a)

FALSE

According to the basic stock valuation model, the value an investor assigns to a share of stock is NOT dependent upon the length of time the investor plans to hold the stock. it depends on the performance of the stock with respect to several other market market related factors.

(b)

FALSE

The semi-strong form efficiency theory follows the belief that because all information that is public is used in the calculation of a stock's current price, investors cannot utilize either technical or fundamental analysis to gain higher returns in the market.

Those who subscribe to this version of the theory believe that only information that is not readily available to the public can help investors boost their returns to a performance level above that of the general market.

(c)

TRUE

Efficient Market Hypothesis(EMH) is influential throughout financial research, but can fall short in application.EMH fails to explain market anomalies, including speculative bubbles and excess volatility

jeff jeffy answered 1 year ago

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