Event Studies in Finance Quiz

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Questions and Answers

What is an event study in finance used to test?

The correlation between different stock prices
The efficiency of stock market regulations
The change in stock or bond prices around specific events (correct)
The impact of market trends on stock prices

What is the Efficient Market Hypothesis (EMH) related to?

The incorporation of new information into stock prices (correct)
The prediction of stock market crashes
The impact of corporate earnings on stock prices
The behavior of stock prices during natural disasters

What does it mean for a market to be efficient?

Prices fluctuate randomly
Prices change predictably with new information
Prices are always at their highest
Prices always fully reflect available and relevant information (correct)

What does the weak form of Market Efficiency (ME) test for?

Return predictability based on past prices and technical analysis (A) Signup and view all the answers

What does the semi-strong form of Market Efficiency (ME) indicate?

Prices reflect all published information, not just past information (C) Signup and view all the answers

What are some examples of events that are studied in event studies in finance?

Corporate earnings announcements, macro-economic news, natural disasters Signup and view all the answers

What is the Efficient Market Hypothesis (EMH) and what does it hypothesize about stock prices?

The hypothesis that in an efficient market, stock prices fully reflect all available and relevant information, and that stock prices change only when new information arrives. Signup and view all the answers

What are the two aspects of efficiency referred to in the Efficient Market Hypothesis?

Speed and quality Signup and view all the answers

What does the weak form of Market Efficiency (ME) test for?

The weak form tests whether prices reflect all information contained in the record of past prices, including technical and fundamental variables. Signup and view all the answers

What does the semi-strong form of Market Efficiency (ME) indicate?

The semi-strong form indicates that prices reflect not only past information but also all other published information. Signup and view all the answers