A B D 1) Which one of the following scientists is regarded as the father of the efficient market hypothesis? a. Maurice Kendall b. Burton Malkiel C. Eugene Fama d. William Sharpe vo 2) The statement "Current prices reflect the information incorporated in past prices refers to which one of the following versions of market efficiency? a. Weak form of market efficiency b. Strong form of market efficiency C. Semi-strong form of market efficiency d. Strong form of markets inefficiency 3) In a survey, the performance of a sample of 194 firms were compared with that of the market prior and after the announcement of a takeover. The price of the target stocks jumped up on the announcement day, but from then on, there are no unusual price movements. Which one of the following versions of efficient market hypothesis is being tested through this experiment? Weak form of market efficiency b. Strong form of market efficiency Semi-strong form of market efficiency d. Strong form of markets inefficiency a. C. B D 5) Which one of the following statements is a fair consequence of efficient market hypothesis? a. Stock prices cannot deviate from true value b. No investor will beat the market in any time period No group of investors will beat the market in the long term d. The concept of market efficiency is a challenge to the existence of managers and analysts C. A B D 10) Indicate the correct effect of portfolio diversification: a. Diversification reduces both unique risk and market risk b. Diversification reduces market risk but not unique risk Diversification reduces unique risk but not market risk d. Diversification reduces neither unique risk nor market risk C. A B D 11) In which case the variance of a portfolio will exactly match the average variance of the stocks in the portfolio? Correlation = 0 b. Correlation = -1 C. Correlation = +1 d. Correlation +1 = = -1