Investments Chapter 8

What type of market efficiency reflects all information, including public, historical, and private?

• Weak

• Semi-Strong

• Strong

• Moderate

In a strong market efficiency, what no longer generates a positive abnormal return?

• Technical analysis

• Insider trading

• Fundamental analysis

• Market speculation

Which type of market efficiency reflects all publicly available information in the price?

• Weak

• Semi-Strong

• Strong

• Perfect

In a weak market efficiency, what does not work?

• Insider trading

• Fundamental analysis

• Technical analysis

• Market timing

What do actively managed mutual funds want in terms of market efficiency?

• More efficient market

• Less efficient market

• Perfectly efficient market

• No efficiency

What are two things that drive market efficiency?

• Market speculation and insider trading

• Number of people and rational decision making

• Technical analysis and market timing

• Diversification and risk tolerance

What happens when new information is released according to academic research on reversals?

• Market remains stable

• Market overreacts

• Market becomes inefficient

• Market ignores the information

What is likely to happen to last year's losers according to academic research on reversals?

• They will remain losers

• They will become winners

• They will disappear from the market

• They will stay the same

What is an alpha in market terms?

• A negative abnormal return

• A positive abnormal return

• A neutral market position

• A market loss

What tends to happen to alphas after fees for actively managed funds?

• They increase

• They remain the same

• They become negative

• They disappear