IS&P Practice Question Errors Questions and Answers Graded A+
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Course
GARP
Institution
GARP
IS&P Practice Question Errors Questions and Answers Graded A+
If markets are efficient, what would you never expect to see
A small number of investors with common characteristics beating the market over long time periods.
In which of the following markets are you most likely to see ineffic...
IS&P Practice Question Errors
Questions and Answers Graded A+
If markets are efficient, what would you never expect to see - answer A small
number of investors with common characteristics beating the market over long time
periods.
In which of the following markets are you most likely to see inefficiencies? (transaction
costs / profit seeking investors) - answer An illiquid market with high transactions
costs and very few profit---seeking investors who think that they can beat the market.
Some technical trading rules try to detect shifts in demand and supply. Which of the
following can be viewed as a precursor to a shift down in demand (and thus of
declining stock prices in the future)? - answer stock price movement that breaches
the support line
Assume that you believe that markets learn slowly and that you use relative strength in
stock prices (stock price is high today, relative to the price in a prior period) and volume
shifts as your technical indicators. Which of the following combinations would make you
most bullish on a stock? (relative strength / trading volume) - answer A stock has
high relative strength and increasing trading volume.
Which of the following is the best characterization of a "value" investor? - answer An
investor who buys companies for less than the value of just its assets in
place.
You have acquired a stake in a company that has accumulated a large cash
balance. You are pushing for the company to return a significant portion of this
cash to its investors in the form of a special dividend. In which of the following
companies is that action likely to benefit stockholders? - answer A mature company,
with relatively few investment opportunities and
a history of taking bad investments.
A concern when investing in small cap companies is that they are far less likely to be
followed by equity research analysts and there is less external information available on
these companies. That makes them more risky as investments. - answer False
One simple strategy for investing in growth stocks is to invest in those stocks that have
delivered the highest historical (past) earnings growth. Why might this strategy not
work? - answer Historical earnings growth is not a good predictor of future earnings
growth.
A widely used GARP (Growth at A Reasonable Price) strategy is to buy stocks that
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