Exam 13: Efficient Capital Markets and Behavioral Challenges

If you live in a remote area with limited access to the news but do a lot of historical research on firms,you would prefer that the financial markets be ________ form efficient so you can have an advantage in the marketplace.

Which one of these terms is used to describe a principle where investors draw conclusions from insufficient data?

Efficient markets require which one of these?

Even though no final conclusion is currently warranted,a number of research papers,including those of Fama and French,have argued that

Markets tend to be efficient when

If behavioral finance holds,this implies

Which one of the following statements is correct concerning market efficiency?

The efficient market hypothesis says that,on average,professional investors will

In an efficient market,the price of a security will

Stock prices fluctuate daily.In relation to the efficient market hypothesis,these fluctuations are

Representativeness,according to financial economists,leads to

If markets are strong-form efficient,then event studies should show that new information affects a related stock's price

The principle that investors slowly adjust their beliefs to new information is referred to as

Insider trading does not offer any advantages if the financial markets are

Your best friend works in the finance office of the Delta Corporation.You are aware that this friend trades Delta stock based on information he overhears in the office.You know that this information is not known to the general public.Your friend continually brags to you about the profits he earns trading Delta stock.Based on this information,you would tend to argue that the financial markets are at best ________ form efficient.

Serial correlation

Choices between various accounting methods should not affect stock prices if

Weak form efficiency is best defined as a market where current prices are based on

The abnormal return in an event study is described as the

Market prices can be efficiently priced if