Which of the following limits the market from becoming a fully efficient market? New information takes time to process. Obtaining new information is costly. The existence of closed end investment companies. Both a. and b. are correct. All of the above answers are correct. None of the above answers is correct.

Which of the following limits the market from becoming a fully efficient market? New information takes time to process. Obtaining new information is costly. The existence of closed end investment companies. Both a. and b. are correct. All of the above answers are correct. None of the above answers is correct.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 8QA

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An efficient market is one in which no one ever profits from having better information than the rest. Discuss this statement and whether or not you find this to be true, false or are you uncertain. Why?
Which of the following is NOT something that is needed for a market to be efficient? A. A large number of buyers and sellers. B. Information being released in a random fashion. C. No transactions costs. D. None of the above. (In other words, ALL of the above are necessary for a market to be efficient.)
An efficient market is one in which no one can profit from having a better information than the rest. Is the statement true or false or uncertain
The weak form of the efficient market hypothesis implies that: CHOOSE ONE A. Investors can achieve abnormal returns, on average, using technical analysis, after adjusting for transaction costs and taxes. B. Insiders, such as specialists and corporate board members, cannot achieve abnormal returns on average. C. No one can achieve abnormal returns using market information. D. NONE OF THE ABOVE
For researchers to consider an investment strategy to have delivered abnormal returns, it must have exceeded the return on its benchmark plus: the return on the risk-free asset. transaction costs and the highest marginal income tax rate. transaction costs and information acquisition costs. All of the above answers are correct. None of the above answers are correct.
Which of the following arguments supports the view that regulation is not necessary, particularly to the extent that it currently exists? Select one: a. Markets for information are not efficient and therefore produce a sub-optimum amount of information, given the problem of 'free riders'. b. Accounting information is like any other good, and people will be prepared to pay for it to the extent that it has a use. c. Investors need protection from fraudulent organisations that may produce misleading information. d. Information asymmetry exists because not everyone has the same power over resources to obtain the information they need.
If the market is efficient with respect to one information set i.e. either weak, semi-strong or strong form, does this necessarily imply that the market is inefficient with respect to the other two information sets? Explain.
Markets tend to be efficlent when Multiple Choice arbitrage is unlawful. amateurs dominate the market. all investors are required to be rational. professional arbitrage exceeds amateur speculation, prices adjust to new information slowly.
Question 1- Markets can never be strong-form efficient because: a. There are too many traders in them. b. Investors are rational. c. Information is costly to acquire. d. All information is public.
True or false : The market is inefficient because some investors in the market suffer from behavioral biases.
Why are the following “issues” considered efficient market anomalies? Are there rational explanations for any of these effects within the efficient market framework? Please explain your thinking and support with appropriate academic evidence. Magnitude Issue Lucky Event Issue
[A] This idea states that there will always be someonewho is willing to pay for an asset at a higher price. [B]This problem involves using every information availableto the point that users simply cannot make a decisionthat would match with all those information. a. Dividend growth model, Black box syndromeb. Greater fool; Black box syndromec. Dividend growth model, Information overloadd. Greater fool; Information overload