Investment & Portfolio Management - Semi Finals Quiz 1

Under the strong form of efficiency stock prices are assumed to reflect any information that may be contained in the past history of the stock prices.

• True

• False

Security analysis concerns the construction and maintenance of a collection of investments.

• True

• False

The income objectives differ from stability of principal in that; there is no specific prescription against declines in principal values.

• True

• False

Arbitrage Price Theory was proposed by Stephen S. Rose and presented in his article ‘The arbitrage theory of Capital Asset Pricing’, published in Journal of Economic Theory in1976.

• True

• False

Market efficiency means that the price which investor is paying for financial asset (stock, bond, other security) partially reflects fair or true information about the intrinsic value of this specific asset or fairly describes the value of the company, the issuer of this security.

• True

• False

Capital market is efficient, if the prices of securities which are traded in the market react to the changes of situation immediately, fully and credibly reflect all the important information about the security’s future income and risk-related with generating this income.

• True

• False

Funds with growth of income as the primary objective often seek to have the annual income increase by at least the rate of inflation.

• True

• False

The expected return of a portfolio is the anticipated amount of returns that a portfolio may generate, making it the mean (average) of the portfolio's possible return distribution

• True

• False

Markowitz approach is viewed as a single period approach.

• True

• False

Inefficient set of portfolios involves the portfolios that the investor will find optimal ones.

• True

• False