Question:

If security prices exhibits semi-strong form of efficiency, one will not gain if he

A.

Depicts the prices in the form of charts to identify pattern which will beat the market.

B.

Buys stock of a company which has declared a bonus issue or has gone for a stock split

C.

Refers to insiders’ advice

D.

Both (a) and (b) above.

Answer» d. Both (a) and (b) above.

Question:

In a well diversified portfolio

A.

market risk is negligible.

B.

systematic risk is negligible.

C.

unsystematic risk is negligible.

D.

nondiversifiable risk is negligible.

Answer» c. unsystematic risk is negligible.

Question:

If investors do not know their investment horizons for certain

A.

the CAPM is no longer valid.

B.

the CAPM underlying assumptions are not violated.

C.

the implications of the CAPM are not violated as long as investors’ liquidity needs are not pric

Answer» c. the implications of the CAPM are not violated as long as investors’ liquidity needs are not pric

Question:

Which statement is not true regarding the market portfolio?

A.

It includes all publicly traded financial assets.

B.

It lies on the efficient frontier.

C.

All securities in the market portfolio are held in proportion to their market values.

D.

It is the tangency point between the capital market line and the indifference curve.

Answer» d. It is the tangency point between the capital market line and the indifference curve.

Question:

The __________ is the indicated dividend divided by the closing price of the stock.

A.

Income

B.

Share

C.

Yield

D.

Earning

Answer» b. Share