8. Which one of the following would provide evidence against the semistrong form of the efﬁcient market theory? a. About 50% of pension funds outperform the market in any year. b. You cannot make abnormal proﬁts by buying stocks after an announcement of strong earnings. c. Trend analysis is worthless in forecasting stock prices. d. Low P/E stocks tend to have positive abnormal returns over the long run. Q147: 9. According to the efﬁcient market hypothesis: a. High-beta stocks are consistently overpriced. b. Low-beta stocks are consistently overpriced. c. Positive alphas on stocks will quickly disappear. d. Negative alpha stocks consistently yield low returns for arbitrageurs. 10. A “random walk” occurs when: a. Stock price changes are random but predictable. b. Stock prices respond slowly to both new and old information. c. Future price changes are uncorrelated with past price changes. d. Past information is useful in predicting future prices.
Solution ID:10137748 | Question answered on 16-Oct-2016
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