Chapter 9 Flashcards
Which of the following statements about collective investment funds is correct?
A. Income funds typically invest in companies that generate high abnormal earnings.
B. Growth funds typically invest in companies with high sales growth.
C. Market neutral funds typically hold security portfolios with betas close to zero.
D. A, B, and C are correct.
C. Market neutral funds typically hold security portfolios with betas close to zero.
Consider the following statement: “According to the Efficient Markets Hypothesis investment strategies that are purely based on publicly available information cannot systematically generate positive abnormal returns.” This statement is
A. True
B. False
A. True
Consider the following statement: “Active portfolio management relies more heavily on financial statement analysis than passive portfolio management.” This statement is
A. True
B. False
A. True
Consider the following statement: “Technical security analysis relies more heavily on financial statement information than fundamental security analysis.” This statement is
A. True
B. False
B. False
Consider the following statement: “In contrast with formal valuation methods, informal valuation methods ignore financial statement information.” This statement is
A. True
B. False
B. False
On January 1, 2022, Company Z’s share price is €11.25 per share. The company’s book value of equity per share is €5, expected profit or loss per share for fiscal year 2022 is €5, and the cost of equity is 10 percent. What are the market’s expectations about the long-term abnormal profit growth rate for company Z?
A. 0 percent
B. 1 percent
C. 2 percent
D. 3 percent
C. 2 percent
Which of the following statements is not correct? Research has shown that
A. Analysts’ forecasts and recommendations tend to be systematically biased.
B. Analysts tend to be more accurate in forecasting near-term performance than in forecasting long-term performance.
C. Analysts’ forecasts are generally more accurate than time-series forecasts.
D. Analysts’ optimism (in forecasts and recommendations) has substantially increased during the late 1990s.
E. None of the above.
D. Analysts’ optimism (in forecasts and recommendations) has substantially increased during the late 1990s.
Consider the following statement: “Past research findings have consistently shown that collective investment and pension funds systematically outperform the market index.” This statement is
A. True
B. False
B. False
