Since limit orders and quotes provide trading options to the market as a whole, what effect would an increase in volatility have on bid/ask spreads? Should limit order traders place their orders close to or far from the market when they cannot adjust their limit prices quickly?

Why would an advocate of the efficient market hypothesis believe that even if many investors exhibit the behavioral biases, security prices might still be set efficiently?

If the weakest form of market efficiency holds, then security prices reflect all information found in past prices and volume. Thus, traditional "technical analysis" will not work. Group of answer choices True False

In general, would a falling rate of market interest cause the price of an MPT security to increase or decrease? Would the increase or decrease be greater if the security was issued at a discount? Would an increase in prepayment be likely or unlikely? Describe with an example.

Which of the following is not a characteristic of an efficient market? Investors can frequently make profits by predicting asset market prices that are different from intrinsic values. The market value of all securities at any one instant in time fully reflect all available information. Investors act rationally. The forces of demand and supply work to maintain that the security's market price and its intrinsic value are in equilibrium.

Which is correct about security valuation? A. In an efficient market, several factors would affect the market and value is not necessarily equals the price. B. The value of the security is determined to compare it with the current market price and usually investor would buy when the value equals the price. C. Sellers would prefer the accept lower bid price than higher bid price to realize gains. D. Investors buy securities when securities are underpriced and sell them when it is overpriced. E. All of the above F. None of the above

The suggestions of the efficient market hypothesis (EMH) include: Select one: O a. The suggestion that either active or passive strategies may be appropriate, depending on the expected direction of the market. O b. The suggestion that stock prices are not random. O c. The suggestion that technical analysis can be used to uncover trends and is quite useful. O d. Only two of the suggestions above and/or below are suggestions of EMH O e. All three are NOT suggestions of EMH

Why should stock market investors ignore specific risks when calculating required rates of return? There is no method for quantifying specific risks. Specific can be diversified away. Specific risks are compensated by the risk-free rate. Beta includes a component to compensate for specific risk.

Which of the following statements is false?   A.   A short sale allows investors to generate additional profits from a decline in a security’s price.   B.   One of underlying assumptions of technical analysis is that supply and demand are driven by both rational andirrational investor behavior.   C.   Investors get a margin call if the equity in a margin account rises above the required maintenance level.   D.   Technical analysis cannot modify price manipulations.

An increase in investor risk aversion would be expected to: Increase the Risk-Free Rate while Decreasing the Expected Return on the Market Portfolio. Increase the Risk-Free Rate while Increasing the Expected Return on the Market Portfolio. Decrease the Risk-Free Rate while Decreasing the Expected Return on the Market Portfolio. Decrease the Risk-Free Rate while Increasing the Expected Return on the Market Portfolio. There is not enough information to determine how the Risk-Free Rate and Expected Return on the Market Portfolio will change. None of the above answers is correct.