10. Which item signifies the difference between income and cash flow?

a.Non-cash items

b.Retained earnings

c.Dividends

d.Long term debt

11. ________ is used to measure the economic or intrinsic value of a security.

a.The sum of future cash flows

b.Expected return

c.Expected return adjusted for risk and time value of money

d.The sum of the future cash flows adjusted for risk and time value of money

12. The two main factors that drive market efficiency are ______.

a.profit motive and competition

b.competition and high returns

c.higher returns and low risk

d.high returns and high stock prices

13. Which of the following statement is TRUE about efficient market hypothesis?

a.The semi-strong form incorporates both the weak and strong form.

b.The semi-strong form incorporates the strong form.

c.The weak form incorporates the semi-strong form.

d.The strong form incorporates the weak form.

14. Why do prices appear to move randomly in an efficient market?

a.Insider trading has unpredictable effect on stock prices.

b.The number of investors who can forecast prices correctly is too small.

c.Only new information affects stock prices.

d.Investors do not process new information correctly.