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Chapter 7 The Stock Market, the Theory of Rational Expectations, and the Efficient Markets Hypothesis 259

104)

Evidence against market efficiency includes

(a)

failure of technical analysis to outperform the market.

(b)

the random walk behavior of stock prices.

(c)

the inability of mutual fund managers to consistently beat the market.

(d)

the January effect.

(e)

all of the above.

Answer:

Question Status: New

105)

Evidence against market efficiency includes

(a)

the January effect.

(b)

the excessive volatility of stock prices.

(c)

the random walk behavior of stock prices.

(d)

all of the above.

(e)

both (a) and (b) of the above.

Answer:

Question Status: New

106)

Evidence against market efficiency includes

(a)

the January effect.

(b)

the small-firm effect.

(c)

the excessive volatility of stock prices.

(d)

all of the above.

(e)

both (a) and (c) of the above.

Answer:

Question Status: New

107)

The efficient markets hypothesis suggests that allocating your funds in the financial markets on the advice of a financial analyst

(a)

will certainly mean higher returns than if you had made selections by throwing darts at the financial page.

(b)

will always mean lower returns than if you had made selections by throwing darts at the financial page.

(c)

is not likely to prove superior to a strategy of making selections by throwing darts at the financial page.

(d)

is good for the economy.

Answer:

Question Status: Previous Edition

108)

According to the efficient markets hypothesis, purchasing the reports of financial analysts

(a)

is likely to increase one’s returns by an average of 10%.

(b)

is likely to increase one’s returns by about 3 to 5%.

(c)

is not likely to be an effective strategy for increasing financial returns.

(d)

is likely to increase one’s returns by an average of about 2 to 3%.

(e)

guarantees negative returns.

Answer:

Question Status: Study Guide

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