Exam 7: The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

If a market participant believes that a stock price is irrationally high,they may try to borrow stock from brokers to sell in the market and then make a profit by buying the stock back again after the stock falls in price.This practice is called

If a corporation announces that it expects quarterly earnings to increase by 25% and it actually sees an increase of 22%,what should happen to the price of the corporation's stock if the efficient markets hypothesis holds,everything else held constant?

Which of the following accurately summarize the empirical evidence about technical analysis?

The major criticism of the view that expectations are formed adaptively is that

According to the efficient markets hypothesis,purchasing the reports of financial analysts

Another way to state the efficient markets hypothesis is: in an efficient market

In rational expectations theory,the term "optimal forecast" is essentially synonymous with

The efficient markets hypothesis indicates that investors

Using the Gordon growth formula,if D1 is $2.00,ke is 12% or 0.12,and g is 10% or 0.10,then the current stock price is

Information plays an important role in asset pricing because it allows the buyer to more accurately judge

In the generalized dividend model,the current stock price is the sum of

Sometimes one observes that the price of a company's stock falls after the announcement of favorable earnings.This phenomenon is

If additional information is not used when forming an optimal forecast because it is not available at that time,then expectations are

Economists have focused more attention on the formation of expectations in recent years.This increase in interest can probably best be explained by the recognition that

In the Gordon Growth Model,the growth rate is assumed to be ________ the required return on equity.

If expectations are formed adaptively,then people

According to rational expectations theory,forecast errors of expectations