EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 11, Problem 7CP
Summary Introduction
To select: The correct statement about the term good relative strength is to be determined.
Introduction :
The relative strength can be defined as the type momentum investing. This is used to select the investments which outperform their market.
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When technical analysts say a stock has good “relative strength,” they mean:a. The ratio of the price of the stock to a market or industry index has trended upward.b. The recent trading volume in the stock has exceeded the normal trading volume.c. The total return on the stock has exceeded the total return on T-bills.d. The stock has performed well recently compared to its past performance.
Use the data below to determine which of the statements is most accurate?
a) For a given percentage change in stock price, company Y will have less impact on the market-cap weighted index as company Z.
b) A 100% increase in the stock price of company X will have a smaller impact on the price-weighted index than a 100% increase in the stock price of company Z.
c) For a given percentage change in the stock price, company X will have a greater impact on the market-cap weighted index than companies Y & Z.
Two indices contain exactly the same stocks; one is a market-capitalization-weighted index that increased by 11%, whereas the other is an equal-weighted index that increased by 8% over the same period. This is explained by which of the following?
There were a large number of stock splits over the period.
There were a small number of stock splits over the period.
Large-capitalization stocks underperformed small-capitalization stocks.
Large and small capitalization stocks performed about the same over the period.
Large-capitalization stocks outperformed small-capitalization stocks
Chapter 11 Solutions
EBK INVESTMENTS
Ch. 11 - Prob. 1PSCh. 11 - Prob. 2PSCh. 11 - Prob. 3PSCh. 11 - Prob. 4PSCh. 11 - Prob. 5PSCh. 11 - Prob. 6PSCh. 11 - Prob. 7PSCh. 11 - Prob. 8PSCh. 11 - Prob. 9PSCh. 11 - Prob. 10PS
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- You were analyzing a stock and came up with the following probability distribution of the stock returns. What is the coefficient of variation on the company's stock?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. State of the Economy Probability of State Occurring Stock's Expected Return Boom 25.00% 24.15% Normal 46.00% 17.40% Recession 29.00% 6.20% Group of answer choicesarrow_forwardYou were analyzing a stock and came up with the following probability distribution of the stock returns. What is the coefficient of variation on the company's stock?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. State of the Economy Probability of State Occurring Stock's Expected Return Boom 35.00% 26.80% Normal 46.00% 13.95% Recession 19.00% 7.55%arrow_forwardSuppose you own Stocks A and B. Based on data over the past decade, the Sharpe ratiofor Stock A is 1.3, while the Sharpe ratio for Stock B is 0.8. Briefly explain which stock hasperformed better.arrow_forward
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