33. The CAPM assumes that investors are single period planners who agree on a common input list from security analysis and seek mean variance optimal portfolios. The CAPM assumes that security markets are ideal in the sense that they are large and investors are price takers, there are no taxes or transaction costs, all risky assets are publicly traded, and investors can borrow and lend any amount at a fixed risk-free rate.

True

False

34. The EMH is the notion that stocks already reflect all available information. Market participants distinguish among three forms of the efficient market hypothesis. Each form has its own contentions, for example the semi-strong form asserts that all publicly available fundamental information is already reflected in prices as well as that from technical analysis (i.e., charts, graphs, etc.).

True

False

35. If an analyst expects interest rates to rise across the yield curve, the analyst would seek to have a longer-than-benchmark duration portfolio. If an analyst expects interest rates to decline across the yield curve, the analyst would seek to have a shorter-than-benchmark duration portfolio.

True

False

36.Convertible bonds give bondholders an option to exchange each bond for a specified number of shares of common stock of the company. While convertible bondholders may benefit if the stock price rises, it comes at a price as convertible bonds offer lower coupon rates than comparable, non-convertible bonds.

True

False