Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
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Chapter 13.2, Problem 2CC
Under what conditions will it be possible to earn a positive alpha and beat the market?
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Examine the weak, semi strong and the strong form if market efficiency, examine the various ways to test the different forms of market efficiency?
What is semi-strong-form EMH? What would you expect to see/not see if markets where semi-strong form efficient? In other words, can you think of market events that would serve as evidence that market is or isn’t semi-strong-form efficient?
What is weak-form EMH? What would you expect to see/not see if markets where weak form efficient? In other words, can you think of market events that would serve as evidence that market is or isn’t weak-form efficient?
Chapter 13 Solutions
Corporate Finance
Ch. 13.1 - If investors attempt to buy a stock with a...Ch. 13.1 - What is the consequence of investors exploiting...Ch. 13.2 - How can an uninformed or unskilled investor...Ch. 13.2 - Under what conditions will it be possible to earn...Ch. 13.3 - Do investors hold well-diversified portfolios?Ch. 13.3 - Why is the high trading volume observed in markets...Ch. 13.3 - What must be true about the behavior of small,...Ch. 13.4 - What are several systematic behavioral biases that...Ch. 13.4 - Prob. 2CCCh. 13.5 - Prob. 1CC
Ch. 13.5 - Prob. 2CCCh. 13.6 - Prob. 1CCCh. 13.6 - Prob. 2CCCh. 13.7 - Prob. 1CCCh. 13.7 - How can you use the Fama-French-Carhart factor...Ch. 13.8 - Which is the most popular method used by...Ch. 13.8 - Prob. 2CCCh. 13 - Assume that all investors have the same...Ch. 13 - Assume that the CAPM is a good description of...Ch. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5PCh. 13 - Explain what the following sentence means: The...Ch. 13 - You are trading in a market in which you know...Ch. 13 - Prob. 8PCh. 13 - Your brother Joe is a surgeon who suffers badly...Ch. 13 - Prob. 11PCh. 13 - Suppose that all investors have the disposition...Ch. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Prob. 27PCh. 13 - Prob. 28P
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- What are the features of a perfectly competitive market? Give two examples of competitive markets. How could a firm in such a market move to a less competitive market?arrow_forwardProvide short answers to the following questions l) Is it true that a market which is efficient in its semi-strong form is automatically efficient in its weakform?arrow_forwardDefine Weak, Semi-Strong and Strong forms of the Efficient Market Hypothesis (EMH). a. How would you construct a test of the Weak form of the EMH? b. What have researchers found when testing the Weak form of the EMH? c. Outline how you would conduct an event study. What efficient market hypothesis are you trying to test? d. Give an example where researchers have used an event study and what did they find? Was it consistent with the EMH?arrow_forward
- Explain efficient market hypothesis and what are anomalies in the efficient markethypothesis?arrow_forwardWhy the following effects are considered efficient market anomalies? Are there rational explanation for any of them? a. P/E effect b. Book-to-market effect c. Momentum effect. d. Small firm effectarrow_forwardExplain what is the “behavioral view” of market efficiency? Cite some sourcesarrow_forward
- Define Weak, Semi-Strong and Strong forms of the Efficient Market Hypothesis (EMH). Please answer C and D!!!!! a. How would you construct a test of the Weak form of the EMH? b. What have researchers found when testing the Weak form of the EMH? c. Outline how you would conduct an event study. What efficient market hypothesis are you trying to test? d. Give an example where researchers have used an event study and what did they find? Was it consistent with the EMH?arrow_forwardWhat are the TRIN Statistics and Cofidence Index and what do their values describe about the bullish and bearish direction of the market?arrow_forward: Does the Efficient Market Hypothesi hold true? Why or why not?arrow_forward
- Discuss the Efficient Market Hypothesis. Your discussion should explain each market form, with examples of the type of information that cannot be used to beat the marketarrow_forwardWhy are the following “effects” considered efficient market anomalies? Are there rational explanations for any of these effects?a. P/E effect.b. Book-to-market effect.c. Momentum effect.d. Small-firm effect.arrow_forwardHow would a person show that they “beat the market”?arrow_forward
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