Question 1

A hybrid strategy is one where the investor

Accepted Answer

A)   uses both fundamental and technical analysis to select stocks.
B)   selects the stocks of companies that specialize in alternative fuels.
C)   selects some actively-managed mutual funds on their own and uses an investment advisor to select other actively-managed funds.
D)   maintains a passive core and augments the position with an actively-managed portfolio.

Question 2

QQAG has a beta of 1.7. The annualized market return yesterday was 13%, and the risk-free rate is currently 3%. You observe that QQAG had an annualized return yesterday of 20%. Assuming that markets are efficient, this suggests that

Accepted Answer

A)   bad news about QQAG was announced yesterday.
B)   good news about QQAG was announced yesterday.
C)   no significant news about QQAG was announced yesterday.
D)   interest rates rose yesterday.
E)   interest rates fell yesterday.

Question 3

In an efficient market the correlation coefficient between stock returns for two nonoverlapping time periods should be

Accepted Answer

A)   positive and large.
B)   positive and small.
C)   zero.
D)   negative and small.
E)   negative and large.

Question 4

A common strategy for passive management is

Accepted Answer

A)   creating an index fund.
B)   creating a small firm fund.
C)   creating an investment club.
D)   creating an index fund and creating an investment club.
E)   creating a small firm fund and creating an investment club.

Exam 11: The Efficient Market Hypothesis

QQAG has a beta of 1.7. The annualized market return yesterday was 13%, and the risk-free rate is currently 3%. You observe that QQAG had an annualized return yesterday of 20%. Assuming that markets are efficient, this suggests that

Correct Answer
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In an efficient market the correlation coefficient between stock returns for two nonoverlapping time periods should be

Correct Answer
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A common strategy for passive management is

Correct Answer
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A hybrid strategy is one where the investor

Correct Answer
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Exam 11: The Efficient Market Hypothesis

QQAG has a beta of 1.7. The annualized market return yesterday was 13%, and the risk-free rate is currently 3%. You observe that QQAG had an annualized return yesterday of 20%. Assuming that markets are efficient, this suggests that

Correct AnswerverifiedShow Answer

In an efficient market the correlation coefficient between stock returns for two nonoverlapping time periods should be

Correct AnswerverifiedShow Answer

A common strategy for passive management is

Correct AnswerverifiedShow Answer

A hybrid strategy is one where the investor

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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