BRIEF PRINCIPLES OF MACROECON.-ACCESS
7th Edition
ISBN: 9781305096592
Author: Mankiw
Publisher: CENGAGE L
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Chapter 9, Problem 6QCMC
To determine
Concept based on
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According to the efficient markets hypothesis,a. changes in stock prices are impossible to predict from publicinformation.b. excessive diversification can reduce an investor's expected portfolioreturns.c. the stock market moves based on the changing animal spirits ofinvestors.d. actively managed mutual funds should give higher returns than indexfunds.
According to the efficient markets hypothesis,a. excessive diversification can reduce an investor’sexpected portfolio returns.b. changes in stock prices are impossible to predictfrom public information.c. actively managed mutual funds should generatehigher returns than index funds.d. the stock market moves based on the changinganimal spirits of investors
Which type of financial intermediary provides individual investors with professional management of their money and diversification in order to limit the risk of investing?
A.
mutual funds
B.
insurance companies
C.
hedge funds
D.
investment banks
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BRIEF PRINCIPLES OF MACROECON.-ACCESS
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- Select all of the following that are true regarding hedging: A. Hedging is risk mitigation through diversification. B. Hedging is the same as arbitirage since it acts in across markets C. Hedging increases the returns of an investment D. Buying an risky investment is an example of hedging Detailedly Explanation Please, Thank you!arrow_forwardThe relationship between a bond and its price is easier to determine than the relationship between a stock and its price.True or Falsearrow_forwardwhich one is correct? According to the semistrong-form efficient market hypothesis, which of the following types of information are fully reflected in stock prices? a. dividend and earnings announcements b. earnings announcements and rates of return c. rates of return, trading volume, and news about the economy d. All of these are correct. e. rates of return, trading volume, and block tradesarrow_forward
- Robert Shiller and Eugene Fama who were jointly awarded the Nobel Prize in Economics in 2013 for their work on asset prices strongly disagree on whether I. stocks can be over or under priced. II. investors are rational. III. asset bubbles exist. Multiple Choice Only II I, II, and III Only I I and II Only IIIarrow_forwardThe main advantage of mutual funds is that theyprovidea. a return insured by the government.b. an easy way to hold a diversified portfolio.c. an asset that is widely used as the medium ofexchange.d. a way to avoid fluctuations in stock and bondprices.arrow_forwardI. When people buy stock, is there a guarantee that they will receive dividends or that they will be able to sell the stock at a price higher than the price they paid for it? J. If there is no guarantee, why are people willing to buy stock?arrow_forward
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