EBK PRINCIPLES OF CORPORATE FINANCE
12th Edition
ISBN: 9781259358487
Author: BREALEY
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 13, Problem 9PS
Market efficiency evidence* Which of the following observations appear to indicate market inefficiency? Explain whether the observation appears to contradict the weak, semistrong, or strong form of the
- a) Tax-exempt municipal bonds offer lower pretax returns than taxable government bonds.
- b) Managers make superior returns on purchases of (heir company’s stock.
- c) There is a positive relationship between (he return on the market in one quarter and the change in aggregate profits in the next quarter.
- d) There is some evidence that stocks that have appreciated unusually in the recent past continue to do so in the future.
- e) The stock of an acquired firm tends to appreciate in the period before the merger announcement.
- f) Stocks of companies with unexpectedly high earnings appear to offer high returns for several months after the earnings announcement.
- g) Very risky stocks on average give higher returns than safe stocks.
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[15 Marks]
Chapter 13 Solutions
EBK PRINCIPLES OF CORPORATE FINANCE
Ch. 13 - Market efficiency True or false? The...Ch. 13 - Prob. 2PSCh. 13 - Market efficiency Which (if any) of these...Ch. 13 - Prob. 4PSCh. 13 - Market efficiency How would you respond to the...Ch. 13 - Market efficiency Respond to the following...Ch. 13 - Prob. 7PSCh. 13 - Prob. 8PSCh. 13 - Market efficiency evidence Which of the following...Ch. 13 - Prob. 10PS
Ch. 13 - Prob. 11PSCh. 13 - Prob. 12PSCh. 13 - Market efficiency implications What does the...Ch. 13 - Prob. 14PSCh. 13 - Prob. 15PSCh. 13 - Abnormal returns Here are alphas and betas for...Ch. 13 - Prob. 18PSCh. 13 - Behavioral finance True or false? a. Most managers...Ch. 13 - Prob. 20PSCh. 13 - Prob. 21PSCh. 13 - Prob. 22PS
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