efficiency are INCORRECT? i) Strong-form efficiency implies that fundamental analysis (such as analysis of the company’s operations and financials) cannot earn extra risk-adjusted returns over the long term
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Which of the following statements about
i) Strong-form efficiency implies that fundamental analysis (such as analysis of the company’s operations and financials) cannot earn extra risk-adjusted returns over the long term.
ii) Semi-strong form efficiency implies that fundamental analysis cannot earn excess risk-adjusted returns.
iii) Weak-form efficiency means that current
iv) If a market is strong-form efficient then current prices reflect all public and private information.
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Solved in 2 steps
- Which is NOT true about the weak, semi-strong, and strong forms of the efficient markets? Under the weak form, only historical information is reflected in asset prices. Under the semi-strong form, both past and currently known information is reflected in prices. Under the strong form, all information, past and present, publicly known and private, is reflected in prices. Under all forms, price levels are quickly impacted by new information.Which of the following about economies of scale is/are TRUE? One or more than one options may be correct. Answers including the wrong options will be marked as wrong.) a. A profitability decrease in trading and other transaction services results from increased efficiency when Fls perform these services. b. Economies of scale helps Fls solve the information asymmetry problem in direct finance. c. A cost reduction in trading and other transaction services results from increased efficiency when Fls perform these services. d. None of the options are true. e. A cost reduction in trading and other transaction services results from stable efficiency when Fls perform these services.Suppose that the market for cherries in Shandong Province consists of two firms: Organicherry and Pesticherry. You are the owner of Organicherry, and have discovered a natural way to ward off aphids without resorting to pesticides. This advantage has allowed you to enjoy a relatively higher yield than Pesticherry. You use this advantage to be the first firm to choose its output level. The inverse demand function for a box of cherries is P = 1,125− 5Q (prices are in CN¥). Organicherry’s costs are CO(QO) = 40QO, and Pesticherry’s costs are CP(QP) = 80QP. If there were no official/legal issues in merging the two firm, would it be profitable to merge with Pesticherry? If so, how much would you offer to Pesticherry’s owners? [You may use the facts that, if R(Q)=aQ2 +bQ+c then MR(Q)=2aQ+b and that,ifC(Q)=cQ then MC(Q) = c.]
- If you received a price increase request from a strategic supplier of goods, for which there is competition, and the request was for an increase of 4.5 percent due to 'abnormal trading conditions, raw material increases, energy prices and overheads', what would be your next actions?When the price of a certain share accurately reflects all available information about the company, both public and private, this is a sign of excellent market efficiency. False or True?A seller has an indivisible asset to sell. Her reservation value for the asset is s, which she knows privately. A potential buyer thinks that the assetís value to him is b, which he privately knows. Assume that s and b are independently and uniformly drawn from [0, 1]. If the seller sells the asset to the buyer for a price of p, the seller's payoff is p - s and the buyer's payoffis b - p. Suppose the buyer makes a take-it-or-leave-it offer p to the seller. What's the optimal offer if the buyer's value is b = 1/2?
- Suppose a large bank has two openings for which it desires managers of different risk aversion. One position is the assistant vice president for commercial construction loans, for which the bank seeks a more risk averse manager. The other position is an assistant vice president to manage the venture capital loan portfolio, for which the bank seeks a manager who is more willing to take risks. The vertical scale of the following graph displays the guaranteed base salary, and the horizontal scale displays the profit-sharing rate—a percentage that represents what additions to or subtractions from one’s pay occur as a result of the profit-sharing agreement. The two hill-shaped curves represent expected profit-sharing payouts that would allow the firm to just break even on its incentive payments to the two managers. The graph also shows the indifference curves (IP and IQ) for two applicants. Which is the indifference curve of the more risk-neutral applicant? A. IQ B. IP Suppose…Which statement is true: The minimum variance hedge Select one: a. is the point at the utmost left of the efficient frontier of risky assets b. minimizes the variance of the hedged position of spot and futures c. can be obtained from linearly regressing the changes in the spot price on the changes of the market portfolio d. None of the above statements is true.QUESTION 1 Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If both firms follow a high-price policy, each will realize a $20 million profit. Alpha will realize a $10 million profit and Beta a $30 million profit. each will realize a $15 million profit. Beta will realize a $10 million profit and Alpha a $30 million profit. Q#2 Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Beta commits to a high-price policy, Alpha will gain the largest profit by engaging in nonprice competition only. also adopting a high-price policy. adopting a low-price policy. adopting a low-price policy, but only if Beta agrees to do the same. Q#3 Refer to…
- Market risk is defined as the risk: a. Incurred by granting loans to companies that do not hold a large market share. b. Incurred in the trading of assets and liabilities due to changes in interest rates, exchange rates and other asset prices. c. That a sudden surge in liability withdrawals may require FIs to liquidate assets at less than fair market prices. d. That an FI loses market share.When deleveraging occurs, the price of assets falls, causing firm net worth to decrease. Why does the decrease in the price of assets occur? Group of answer choices Their demand curve shifts left. Their demand curve shifts right. Their supply curve shifts left. Their supply curve shifts rightWhen a company decides to sell its stock to the public for the first time, it hires the services of a broker or brokerage firm. True or False