Inanefficientcapitalmarket,stockpricesreflectthepresentvalueofthefirm’sexpectedcashflows. OnlystatementIiscorrect OnlystatementIIiscorrect BothstatementsIandIIarecorrect NeitherstatementInorIIiscorrect c ANSWER: Whichofthefollowingstatementsis/arecorrectaboutfinancialintermediaries? Financialintermediariesprimarilyoperatewithinthesecondarymarket. OnlystatementIiscorrect. OnlystatementIIiscorrect. BothstatementsIandIIarecorrect. NeitherstatementInorIIiscorrect. d ANSWER: Therearethreeformsofmarketefficiency.AllofthefollowingstatementsarecorrectEXCEPT: Theweakformefficiencystatesthatnoinvestorcanearnexcessreturnsbasedonhistoricalpriceinformation. Marketefficiencyisahardandfastrulethathasbeenverifiedinreal-worldsituations. d ANSWER: There are highly publicized hedge fund problems, for example Julian Robertson’s Tiger fund or Long Term CapitalManagement. The impact that this has had on hedge funds is: minimal.Theyhavecontinuedtogrowinsizeandnumber. huge.Hedgefundsarebeingdiscontinued. beingfeltintheoverallreallocationofhedgefundsintobonds. inconsequentialandirrelevant.Investorsmayrelyontheduediligenceofthefundmanagersforsafeinvesting. a ANSWER: Anexampleofafinancialmiddlemanisa: commercialbank stockbroker insurancecompany thriftinstitution b ANSWER:
Inanefficientcapitalmarket,stockpricesreflectthepresentvalueofthefirm’sexpectedcashflows. OnlystatementIiscorrect OnlystatementIIiscorrect BothstatementsIandIIarecorrect NeitherstatementInorIIiscorrect ANSWER: c Whichofthefollowingstatementsis/arecorrectaboutfinancialintermediaries? Financialintermediariesprimarilyoperatewithinthesecondarymarket. OnlystatementIiscorrect. OnlystatementIIiscorrect. BothstatementsIandIIarecorrect. NeitherstatementInorIIiscorrect. ANSWER: d Therearethreeformsofmarketefficiency.AllofthefollowingstatementsarecorrectEXCEPT: Theweakformefficiencystatesthatnoinvestorcanearnexcessreturnsbasedonhistoricalpriceinformation. Marketefficiencyisahardandfastrulethathasbeenverifiedinreal-worldsituations. ANSWER: d There are highly publicized hedge fund problems, for example Julian Robertson’s Tiger fund or Long Term CapitalManagement. The impact that this has had on hedge funds is: minimal.Theyhavecontinuedtogrowinsizeandnumber. huge.Hedgefundsarebeingdiscontinued. beingfeltintheoverallreallocationofhedgefundsintobonds. inconsequentialandirrelevant.Investorsmayrelyontheduediligenceofthefundmanagersforsafeinvesting. ANSWER: a Anexampleofafinancialmiddlemanisa: commercialbank stockbroker insurancecompany thriftinstitution ANSWER: b
Test-Bank-Contemporary-Financial-Management-13th-Edition-Moyer.docx