1 The are the most apt to sue the underwriters if an initial public offering 1PO) is significantly underpriced O a) original owners of the firm issuing the securities O b) investors who purchase shares directly from the underwriters O c) investors who purchase shares in the aftermarket on the second day of trading O d) investors who purchase shares during the waiting period O c) investors who purchase shares in the aftermarket on the first day of trading The small-firm-in-January effect refers to the phenomenon that portfolios of small-firm stocks (compared to portfolios of large-firm stocks) have: O b) High returns in December and January. O c) Abnormal positive returns, primarily in January. O a) A tendency to underperform the stock market. O d) Returns in January that are positively correlated with returns in December. Which of the following is NOT an advantage of relative valuation as compared to discounted cash flow valuation? O b) Relative valuation can be used even when cash flows are negative O d) Relative valuation will always identify at least some securities as under and relative to each other. O c) Relative valuation will incorporate current market perceptions O a) Relative valuation is unaffected by assumptions such as growth and ROE 4 Stock prices follow a random walk because O a) investors are irrational O b) new information is unpredictable d) investors tend to rely on technical analysis c) information is not efficiently disseminated O