6. A. B. C. D. 7. Investors that read SeekingAlpha.com or other sources of market information and make trades based on the belief that they have identified mispriced securities: tend to make substantial profits on a daily basis. tend to make the markets more efficient. are always quite successful if the article is based on well-known public information are always quite successful if the article is based on historical information Which of the following would be a possible way to earn abnormally high trading profits if markets are semistrong-form, but not necessarily strong-form, efficient? Buy shares in companies with low P/E ratios Buy shares in companies with recent above-average price changes Buy shares in companies with recent below-average price changes Buy shares in companies for which you have advance knowledge of the board's plan to replace the CEO with a new CEO. Suppose you are a lawyer working for a firm that advises corporate firms planning to sue other corporations for antitrust damages. You find that you can beat the market by short-selling the stock of the firm that will be sued. This finding is a violation of the: A. B. C. D. 8. A. B. C. D. E. moderate form of the efficient market hypothesis. semistrong form of the efficient market hypothesis. strong form of the efficient market hypothesis. weak form of the efficient market hypothesis. None of these. 9. Company X has a single bond issue outstanding. Yesterday after the market closed the company CEO revealed the SEC was investigating the company for accounting irregularities. The perceived credit quality of the company has deteriorated due to the announcement. All else constant, what would you expect to happen to the WACC used by Company X to evaluate its projects? It would increase because the bond's price will rise It would increase because the bond's price will fall It would decrease because the bond's price will rise It would decrease because the bond's price will fall It would rise or fall unpredictably A B. C. D. E. 6. A. B. C. D. 7. Investors that read SeekingAlpha.com or other sources of market information and make trades based on the belief that they have identified mispriced securities: tend to make substantial profits on a daily basis. tend to make the markets more efficient. are always quite successful if the article is based on well-known public information are always quite successful if the article is based on historical information Which of the following would be a possible way to earn abnormally high trading profits if markets are semistrong-form, but not necessarily strong-form, efficient? Buy shares in companies with low P/E ratios Buy shares in companies with recent above-average price changes Buy shares in companies with recent below-average price changes Buy shares in companies for which you have advance knowledge of the board's plan to replace the CEO with a new CEO. Suppose you are a lawyer working for a firm that advises corporate firms planning to sue other corporations for antitrust damages. You find that you can beat the market by short-selling the stock of the firm that will be sued. This finding is a violation of the: A. B. C. D. 8. A. B. C. D. E. moderate form of the efficient market hypothesis. semistrong form of the efficient market hypothesis. strong form of the efficient market hypothesis. weak form of the efficient market hypothesis. None of these. 9. Company X has a single bond issue outstanding. Yesterday after the market closed the company CEO revealed the SEC was investigating the company for accounting irregularities. The perceived credit quality of the company has deteriorated due to the announcement. All else constant, what would you expect to happen to the WACC used by Company X to evaluate its projects? It would increase because the bond's price will rise It would increase because the bond's price will fall It would decrease because the bond's price will rise It would decrease because the bond's price will fall It would rise or fall unpredictably A B. C. D. E
