Exam 12: What Happens If Markets Are Efficient or Not?

If an astute (or lucky) market analyst were to find a "money machine" system that consistently beat the market, would the system eventually become self-defeating?

Nike Inc. reports first quarter earnings of $2.00 per share. As an investor using the SUE technique, you had estimated earnings to be $1.50 per share, with a standard error of estimate (SEE) of 0.15. (a) Calculate the SUE for Nike. (b) Would this stock be a good buy on the basis of this SUE?

If there is less efficiency in emerging markets than in developed markets, there should be higher performance in emerging markets than in developed markets.

An efficient market is defined as one in which:

Value Line's 1 to 5 stock ranking system of timeliness refers to:

The highest level of market efficiency is

Stockholders that own more than ____% of a company's stock are considered insiders by the SEC.

An earnings announcement effect would not be considered a good test of the weak form of the EMH.

Weak form market efficiency

Debont and Thayler (1985)'s overreaction hypothesis tends to:

A lady bought 100 shares of a leading diamond mining company with an expected return of 20 percent per year. The following day the company's president announced a major new discovery in Arkansas. The stock price immediately doubled. This scenario probably best illustrates

In terms of Venn Diagrams in terms of states of the world, explain how weak-form, semistrong form, and strong form market efficiency relate to one another.

With regard to market efficiency, identify the INCORRECT statement.

The disposition effect relates to the fact that:

Calendar market anomalies include day-of-the-week, turn-of-the-month, day preceding a holiday effect.

The weak form of the EMH is supported if successive price changes over time are

Based on the research related to market anomalies, investors should prefer

Listed below are the actual returns on two stocks X and Y, and on the market (R_M), along with their systematic risk measures (Betas) relative to the time period, t. 12.2 15.5 0 0.8 9.7 6.0 0 1.2 (a) What is the abnormal return for stock X when you consider its systematic risk measure? (b) What is the abnormal return for stock Y when you consider its systematic risk measure?

According to the semi-strong form of the EMH, investors who invest in a stock after a highly positive announcement concerning the stock can expect to earn

Some market scholars talk about tiers of stocks in the markets. A top tier on the NYSE would be the largest, most widely held stocks. Second and third tiers would consist of stocks that are less widely held and followed by fewer analysts. Is it possible that the market might be more efficient for the top tier and progressively less efficient for the lower tiers?