IS Question and answers correctly solved If markets are efficient, what would you never expect to see - correct 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...
IS&P Practice Question Errors
If markets are efficient, what would you never expect to see - correct 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) - correct 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)? - correct 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) - correct answer ✔A stock has high relative
strength and increasing trading volume.
Which of the following is the best characterization of a "value" investor? -
correct 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? - correct 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. - correct
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? - correct 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
trade at PE ratios less than their expected growth rates. If you adopt this
strategy,
which of the following are you likely to face? - correct answer ✔You will find
too many cheap stocks when interest rates are high and the
economy is growing strongly.
Looking at studies on insider buying/selling, which of the following conclusions
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