CHAPTER 4

Question 1

According to the efficient market hypothesis, the most efficient market is the:
Question 4Answer

a.
small capital stocks market.

b.
corporate bond market.

c.
large capital stocks market.
Incorrect, chapter reference 4D2

d.
government bond market.

Answer 1

d

Question 2

The returns from an investment have achieved an average return of 5%. If the investment has a standard deviation of 5%, approximately what percentage of returns are expected to be positive?
Question 6Answer

a.
95%.

b.
84%.

c.
68%.
Incorrect, chapter reference 4A1

d.
16%.

Answer 2

b

Question 3

Identified as an element of behavioural finance, investors guilty of ‘fear of regret’ will tend to:
Question 13Answer

a.
hold on to a falling stock for too long.

b.
not invest in asset-backed securities.

c.
sell a falling stock too quickly.
Incorrect, chapter reference 4E1B

d.
favour tracker funds.

Answer 3

a