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Chapter 7 The Stock Market, the Theory of Rational Expectations, and the Efficient Markets Hypothesis 261

114)

The advantage of a “buy-and-hold strategy” is that

(a)

net profits will tend to be higher because there will be fewer brokerage commissions.

(b)

losses will eventually be eliminated.

(c)

the longer a stock is held, the higher will be its price.

(d)

only (b) and (c) of the above are true.

Answer:

Question Status: Previous Edition

115)

For small investors, the best way to pursue a “buy and hold” strategy is to

(a)

buy and sell individual stocks frequently.

(b)

buy no-load mutual funds with high management fees.

(c)

buy no-load mutual funds with low management fees.

(d)

buy load mutual funds.

(e)

learn technical analysis.

Answer:

Question Status: New

116)

The efficient markets hypothesis indicates that

(a)

investors should not try to outguess the market by constantly buying and selling securities.

(b)

investors do better on average if they adopt a “buy and hold” strategy.

(c)

buying into a mutual fund is a sensible strategy for a small investor.

(d)

all of the above are sensible strategies.

(e)

only (a) and (b) of the above are sensible strategies.

Answer:

Question Status: Revised

117)

The efficient markets hypothesis suggests that

(a)

investors can use the advice of technical analysts to outperform the market.

(b)

investors let too many unexploited profit opportunities go by if they adopt a “buy and hold” strategy.

(c)

buying into a mutual fund is a sensible strategy for a small investor.

(d)

only (b) and (c) of the above are sensible strategies.

Answer:

Question Status: Revised

118)

The efficient markets hypothesis indicates that

(a)

investors can use the advice of technical analysts to outperform the market.

(b)

investors do better on average if they adopt a “buy and hold” strategy.

(c)

investors let too many unexploited profit opportunities go by if they adopt a “buy and hold” strategy.

(d)

investors do better if they purchase loaded mutual funds.

Answer:

Question Status: Revised

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