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Chap008

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Chap008
Which of the following beliefs would not preclude charting as a method of portfolio management?
D. Stock prices follow recurring patterns. In a 1953 study of stock prices, Maurice Kendall found that ________.
A. there were no predictable patterns in stock prices
The weak form of the EMH states that ________ must be reflected in the current stock price.
A. all past information including security price and volume data
The semi-strong form of the EMH states that ________ must be reflected in the current stock price.
B. all publicly available information
The strong form of the EMH states that ________ must be reflected in the current stock price.
C. all information including inside information
Random price movements indicate ________.
D. that markets are functioning efficiently
When the market risk premium rises, stock prices will ________.
B. fall
The small firm in January effect is strongest ________.
A. early in the month
Evidence suggests that there may be _______ momentum and ________ reversal patterns in stock price behavior.
D. short-run, long run
Proponents of the EMH typically advocate __________.
C. a passive investment strategy

Stock prices that are stable over time _______.
B. indicate that the market is not incorporating new information into current stock prices

The tendency when the ______ performing stocks in one period are the best performers in the next and the current ________ performers are lagging the market later is called the reversal effect.
A. worst, best
Which of the following is not a method employed by followers of technical analysis?
C. Earnings forecasting
Which of the following is not a method employed by fundamental analysts?
B. Relative strength analysis
The primary objective of fundamental analysis is to identify __________.
C. mis-priced stocks
If you believe in the __________ form of the EMH, you believe that stock prices reflect all publicly available information but not information that is available only to

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