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The 1st-day returns on initial public offerings (IPOs) are typically very low or negative. O True False
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- Which of the following contradicts weak form efficiency? Group of answer choices 1- Stock prices do not reflect information that is only available to insiders. 2- Good or bad recent stock return performance continues over the next three months. 3- The cumulative abnormal returns continue to increase until six months after a firm announces a good unexpected earnings. 4- Technical analysis could not provide abnormal returns. Fundamental analysis could not provide abnormal returns.Managers of firms may consider a stock repurchase when they believe their stock is ____ by the market, or a offering when they believe their stock is by the market. undervalued; undervalued O overvalued; overvalued O undervalued; overvalued O overvalued; undervalued O none of the above 2255After an Initial Public Offering (IPO), a new stock is listed which has a negative beta. What causes negative beta? What does this listing mean for the market portfolio?
- Discuss the potential reasons why initial public offerings (IPOs) are typically underpriced.The finding that trading on analysts stock recommendations generates an abnormal return (alpha) is:Group of answer choices a) a violation of weak form market efficiency. b) a violation of semi-strong form market efficiency. c) consistent with CAPM. d) consistent with market efficiency.A study analyzed the behavior of the stock prices of firms that had lost antitrust cases. Included in the diagram are all firms that lost the initial court decision, even if the decision was later overturned on appeal. The event at Time 0 is the initial, pre-appeal court decision. Assume no other information was released, aside from that disclosed in the initial trial. The stock prices all have a beta of 1. Is the diagram consistent with market efficiency? Why or why not?
- Stock prices in an inefficient market tend to adjust faster to the new public information. Select one: OTrue O FalseStock purchased through a rights offering may carry lower margin requirements. True or False True FalseYou buy a stock from the capital market. If the capital market is semi-strong efficient, which of the following statements is NOT correct? a. You cannot earn any abnormal returns above the required return by trading on public information. b. Past stock prices can be used to predict future stock prices. c. The technical analysis of publicly available information will not lead to any abnormal returns. d. The stock is fairly priced. e. Stock prices reflect all publicly available information.
- Which of the following statements is most accurate in analyzing a stock? If the expected return exceeds itsrequired return__________________a. The stock should be sold.b. The stock is good to buy.c. The management is probably not trying to maximize the price per share.d. Dividends are not likely to be declarede. The stock is experiencing supernormal growth**True/false questions ** a) APR interest includes compounding effect. b) Most M&As in U.S. history were friendly, and the payment method was often cash. c) Stock A has a higher expected return and lower variance than stock B. Including B in an efficient portfolio is questioned. d) In IPO pricing, dual - class stock tends to be undervalued compared to single - class stock. e) The value of a company is not independent of its structure due to the tax shieldAssumes stock markets are both deep (many buyers and sellers) and liquid (easy to buy or sell). As soon as new information becomes available about a company, the supply and/or demand for its stock are not immediately affected. The first and second statements are both false. The first statement is false. The second statement is true. The first and second statements are both true. The first statement is true. The second statement is false.