10. When all investors correctly interpret and u- information, as well as information that can from market prices or the trades of others, they have: A) sensation seeking expectations. B) positive expectations. C) rational expectations. D) confident expectations.
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- Statement 1: Fundamental analysis believe that the historical performance of the stocks and markets areindications of future performanceStatement 2: Fundamental analysis works best in determining market sentiment and factor in the creation ofinvestment or trading decisionsStatement 3: Fundamental analysis will succeed if the analyst finds overlooked data in identifying undervaluedsecuritiesStatement 4: Fundamental analysis works best if all investors are logical and could separate emotions frominvestment decision.Statement 5: Fundamental analysis use charts and patterns that can suggest future activity and to measure asecurity’s intrinsic value.a. Only statements 1 and 3 are correct b. Only statements 2 and 4 are correct c. Only statements 1 and 2 are correct d. Only statements 3 and 4 are correcta. What determines stock market valuations? b. Is a stock's price primarily determined by the discounted sum of future cash flows, monetary policy, or fear and greed? c. Is market timing possible using sentiment indicators such as put/call ratios and Investor's Intelligence surveys? Please ensure to add references and citations.Market timers focus onusing overall market trends as a basis for predicting when to buy or sell investments. However, they can use valuation techniques on specific financial instruments to support their decision. True or false?
- Which of the following most accurately describes fundamental analysis? a. Makes use of trend chart patterns to determine intrinsic value of security.b. Makes use of information derived from stock prices patterns and movementsc. Makes use of P/E ratiod. Makes use of bottom-up approache. All of the abovef. None of the aboveQuestion 2 - Biases Part A. Fisher and Statman (2002) find that investors believe that their own portfolios will outperform the market portfolio. The evidence is consistent with which of the following biases? a) representativenessb) conservatismc) memory biasd) overconfidence Part B. The post-earnings drift reflects which of the following biases? a) overconfidence b) memory bias c) representativeness d) conservatismPart C. Investors' expectation about the future performance of stock market tends to rise or fall with its recent performance. Their expectation has which of the following biases? a) conservatism b) representativeness c) memory bias d) overconfidenceThe small firm effect refers to the observed tendency for stock prices to behave in a manner that is contrary to normal expectations. Describe this effect and discuss whether it represents sufficient information to conclude that the stock market does not operate efficiently. In formulating your response, consider: (a) what it means for the stock market to be inefficient, and (b) what role the measurement of risk plays in your conclusions about each effect.
- The semistrong form of the efficient market hypothesis asserts that stock prices:a. Fully reflect all historical price information.b. Fully reflect all publicly available information.c. Fully reflect all relevant information, including insider information.d. May be predictable.1. What effect does increasing inflation expectations have on the required returns of investors in common stock? 2. Explain the specific relationship between risk and reward and why this relationship must be true.When all investors have the same information and care only about expected return and volatility; if new information arrives about one stock, can this information affect the price and return of other stocks?
- “Value-weighted index could provide a better signal on the market condition to the investors as compared to price-valued index.” Do you agree with this statement? Why?Mark thinks that there is an interesting paradox of the efficient market hypothesis. If the market believes that prices reflect all information, investors will stop seeking mispriced securities. This may lead to more mispriced stocks and more inefficiency. However, if the market believes that inefficiency still exists, the competition of trying to be the first to find mispriced securities will make markets more efficient. Do you agree with Mark? Why or why not? Please briefly comment.1) If you believe in the _______ form of the EMH, you believe that stock prices only reflect all information that can be derived by examining market trading data, such as the history of past stock prices, trading volume or short interest. A) semistrong B) strong C) weak D) All of the options are correct. E) None of the options are correct. Please justify your answer.
