Financial Markets and Investment Principles
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Questions and Answers

In an efficient market, how can higher returns be earned?

  • By avoiding securities altogether
  • By investing in low-risk securities
  • By timing the market effectively
  • By investing in riskier securities (correct)
  • What does the efficient market hypothesis imply about trade execution?

  • Trades are often delayed and complicated
  • Trades require complex approvals and procedures
  • Trades can be executed quickly, easily, and inexpensively (correct)
  • Trades are usually costly and time-consuming
  • How predictable is a company's stock price if its revenues and earnings are highly predictable?

  • Predictable only for institutional investors
  • Unpredictable
  • Highly predictable (correct)
  • Predictable in the short term only
  • In a semi-strong efficient market, what advantage do traders with non-public information have?

    <p>No advantage over those with only public information</p> Signup and view all the answers

    Can investors skilled in exploiting behavioral errors consistently outperform the market?

    <p>Yes, by a wide margin</p> Signup and view all the answers

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