Which of the following is not a premise in traditional finance. The mean-variance portfolio theory governs, markets are inefficient, markets are efficient, investors are rational
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Which of the following statements concerning market efficiency is correct? I. An efficient market accurately aggregates information. II. In an efficient market, portfolio managers add value by conducting detailed financial analyses of firm fundamentals. III. In an efficient market, the only way to earn higher returns is to take on more risk. IV. In the most extreme version of the efficients market hypothesis, only insiders can earn excess returns.
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the remains on of the cornerstone of modern finance theory . it implies that on average asset process are approximately their intrinsic values
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Which of the following is NOT correct with respect to the Efficient Market Hypothesis? If markets are semi-strong form efficient, then fundamental analysts would not be able to earn abnormally good returns, after considering the risk they assume. Semi-strong form efficiency says that if a company announces a labor strike, the stock price very quickly adjusts downward. Evidence suggests that markets are NOT strong form efficient, since insiders could make abnormally good returns trading on private information. However, that is illegal. Semi-strong form efficiency says that when Stryker makes an earnings announcement, the stock price quickly reflects the new information. Weak form efficiency says that technical analysts who study charts of stock prices and volumes can regularly make abnormally good returns, after considering the risk they assume.
Rashmi S.
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