Strong-form efficient markets theory proclaims that ________. A) one can chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market B) one can exploit publicly available news or financial statement information to routinely outperform the market C) current prices reflect the price and volume […]
If a firm extends 4/10, net 60-day terms of sale, what is the cost in terms of nominal APR? Assume a 360-day year. A) 23.99% B) 30.0% C) 29.40% D) 27.86% ANSWER B
When the conclusion of the capital asset pricing model is graphed, the resulting line is called the ________. A) Beta B) Capital Market Line C) Characteristic Line D) Efficient Set E) Security Market Line ANSWER E
A stock just paid a dividend of $1.15, has a required rate of return of 10%, and a constant dividend growth rate of 3%. What price should this stock be selling for? A) $16.92 B) $15.20 C) $8.50 D) $8.20 E) $17.15 ANSWER A
The ________ are quite dynamic in terms of processing trades and incorporating information in prices and thus are considered very efficient markets. A) domestic bond markets B) equity markets C) fixed income markets D) foreign bond markets ANSWER Answer: B
________ has to do with the speed and accuracy of processing a buy or sell order at the best available price. A) Market efficiency B) Mechanical efficiency C) Informational efficiency D) Operational efficiency ANSWER Answer: D
Gap Inc. has outstanding nonconvertible preferred stock (cumulative) that pays a quarterly dividend of $1.25. If your required rate of return is 9.5%, what should you be willing to pay for 1000 shares of the firm? A) $52,631.58 B) $52,621.58 C) $52,611.58 D) $52,601.58 ANSWER Answer: A Explanation: A) This situation is that […]
________ refers to how quickly information is reflected in the available prices for trading. A) Market efficiency B) Mechanical efficiency C) Informational efficiency D) Operational efficiency ANSWER Answer: C
Which of the following might occur when a firm increases its collection efforts? A) a decline in accounts payable B) an increase in bad debts C) an increase in inventory costs D) an increase in sales ANSWER B
In ________, current prices reflect the price history and trading volume of the stock. It is of no use to chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market. A) weak-form efficient markets B) strong-form efficient markets C) semi-strong-form efficient markets D) operational […]
