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

An expectation may fail to be rational if

A stock's price will fall if there is

In the one-period valuation model,the value of a share of stock today depends upon

Evidence in support of the efficient markets hypothesis includes

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

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

A change in perceived risk of a stock changes

The January effect refers to the fact that

Tests used to rate the performance of rules developed in technical analysis conclude that technical analysis

Mean reversion refers to the fact that

Using the Gordon growth formula,if D₁ is $1.00,k_e is 10% or 0.10,and g is 5% or 0.05,then the current stock price is

The elimination of unexploited profit opportunities requires that ________ market participants be well informed.

The efficient markets hypothesis predicts that stock prices follow a "random walk." The implication of this hypothesis for investing in stocks is

According to rational expectations,

What rights does ownership interest give stockholders?

Which of the following types of information most likely allows the exploitation of a profit opportunity?

A stockholder's ownership of a company's stock gives her the right to

The small-firm effect refers to the

________ and ________ may provide an explanation for stock market bubbles.

For small investors,the best way to pursue a "buy and hold" strategy is to