Which of the following is INCORRECT? Select one: a. Momentum accompanied by lower trading volume is...

Which of the following is INCORRECT?

Select one:

a. Momentum accompanied by lower trading volume is stronger and more sustained than momentum with higher trading volume

b. Price momentum is more sustained and stronger for higher growth companies with higher price to book ratios than for more mature companies with lower price to book ratios

c. In general, investors like negative skewness and they do not like positive skewness in returns.

d. Option B and Option C

e. Option A and Option C

Solutions

Expert Solution

When momentum is accompanies by higher trading volume then the price trend is more sustained and stronger and in general people like assets which have positive skewness (large favorable outcome), people do not prefer assets which have large negative skewness. The statement regarding price momentum of higher growth companies is true, so the statement which is incorrect are both (a) and (C)

Hence the correct option should be

e) Option A and Option C

jeff jeffy answered 2 years ago

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