49.Multifactor models seek to improve the explanatory power of single factor models by explicitly accounting for the various systematic components of security risk. The models use indicators intended to capture a wide range of big-picture factors. Ross APT and French-Famas factor models are examples of multifactor models.

True

False

50. The Disposition Effect relates to the tendency of investors to sell losers too soon and to hold onto winners too long. While a behavioral phenomenon, the disposition effect is irrational from many perspectives, including those from taxes, momentum, stop losses, etc.

True

False

51.The EMH makes two important predictions. First, it implies that security prices properly reflect whatever information is available to investors. A second implication follows, specifically, that active traders will find it difficult to outperform passive strategies such as holding market indices. To do this would require differential insight (i.e., information) and this, in a highly competitive market, is very hard to come by.

True

False

52. Duration is a direct measure of the sensitivity of a bonds price to a change in its yield. Duration equals the weighted average of the times to each coupon or principal payment. Convexity, the second derivative of price with respect to a change in interest rates, specifically refers to the curvature of a bonds price-yield relationship.

True

False