QuestionQuestion 1Which of the following is true?A. Most empirical evidence is consistent with strong form efficiency.B. Most empirical evidence is inconsistent with weak form efficiency.C. Strong form market efficiency is not supported by the empirical evidence.D. Both Most empirical evidence is consistent with strong form efficiency; and Strong form market efficiency is not supported by the empirical evidence.E. Both Most empirical evidence is inconsistent with weak form efficiency; and Strong form market efficiency is not supported by the empirical evidence.2 points SavedQuestion 2If the market is weak form efficient:A. semistrong form efficiency holds.B. strong form efficiency must hold.C. semistrong form efficiency may hold.D. markets are not weak form efficient.E. None of these.2 points Save AnswerQuestion 3If a market is strong form efficient, it also implies that:A. semistrong form efficiency holds.B. weak form efficiency holds.C. one cannot earn abnormal returns with inside information.D. Both semistrong form efficiency holds; and one cannot earn abnormal returns with inside information.E. semistrong form efficiency holds; and weak form efficiency holds; and one cannot earn abnormal returns with inside information.2 points Save AnswerQuestion 4The abnormal return in an event study is described as:A. the return earned on the day of announcement for the stock.B. the excess return earned on the day of announcement for the stock.C. the total return earned for the investment holding period.D. All of these.E. None of these.2 points Save AnswerQuestion 5Evidence on stock prices finds that the sudden death of a chief executive officer causes stock prices to fall and the sudden death of an active founding chief executive officer causes stock price to rise. This contrary evidence happens because:A. markets are inefficient and unsure of the real value of the events.B. death is inevitable and market prices are random.C. things simply happen.D. the value of the founding executive was a negative to the firm.E. None of these.2 points Save AnswerQuestion 6Which of the following is true?A. A random walk for stock price changes is inconsistent with observed patterns in price changes.B. If the stock market follows a random walk, price changes should be highly correlated.C. If the stock market is weak form efficient, then stock prices follow a random walk.D. All of these.E. Both If the stock market follows a random walk, price changes should be highly correlated; and If the stock market is weak form efficient, then stock prices follow a random walk.2 points Save AnswerQuestion 7Ritter’s study of Initial Public Offerings (IPOs) showed that the post offering stock performance was:A. less than the control group by about 2% in the five years following the IPO.B. incorrectly priced at issuance because over the next five years the abnormal returns were greater than zero on average.C. immaterial to the pricing of the IPO because future market performance is unknown at issuance.D. equal across IPOs, irrespective of risk or which year they were issued.E. All of these.2 points Save AnswerQuestion 8Which one of the following statements is correct concerning market efficiency?A. Real asset markets are more efficient than financial markets.B. If a market is efficient, arbitrage opportunities should be common.C. In an efficient market, some market participants will have an advantage over others.D. A firm will generally receive a fair price when it sells shares of stock.E. New information will gradually be reflected in a stock’s price to avoid any sudden change in the price of the stock.2 points Save AnswerQuestion 9Salmon Inc. has debt with both a face and a market value of $3,000. This debt has a coupon rate of 7% and pays interest annually. The expected earnings before interest and taxes is $1,200, the tax rate is 34%, and the unlevered cost of capital is 12%. What is the firm’s Select one of the more recently established (and larger) capital projects funds (a major fund

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