CFA-Topik 3-4 (3)

A market’s efficiency is most likely to negatively affected by:

• a ban on short selling.

• coverage of the exchange listed companies

• a high amount of trading activity

An increase in which of the following factors would most likely improve a market’s efficiency?

• Number of participants.

• Restrictions on short selling.

• Bid-ask spreads

The main functions of the financial system least likely include:

• preventing investors from generating abnormal profits by trading on information

• allocating financial resources to their most productive uses

• bringing together savers and borrowers.

The idea that uninformed traders, when faced with unclear information, observe the actions of informed traders to make decisions, is referred to as:

• herding behavior.

• information cascades.

• narrow framing.

The main functions of the financial system most likely include:

• determining equilibrium interest rates and allocating capital to its most productive uses.

• determining the supply of money and determining equilibrium interest rates

• allocating capital to its most productive uses and determining the supply of money

Equity securities most likely include

• preferred stock and certificates of deposit.

• common stock and warrants

• commercial paper and repurchase agreements.

In contrast with a typical forward contract, futures contracts have:

• greater counterparty risk.

• less liquidity

• standardized terms.

If an investor buys 100 shares of a $50 stock on margin when the initial margin requirement is 40%, how much money must she borrow from her broker?

• $2,000

• $4,000

• $3,000

If the efficient markets hypothesis is true, portfolio managers should do all of the following EXCEPT:

• Minimize transaction costs.

• Work more with clients to better quantify their risk preferences

• Spend more time working on security selection

Which of the following forms of the EMH assumes that no group of investors has monopolistic access to relevant information?

• Strong-form.

• Both weak and semistrong form.

• Weak-form.