Concepts Review and Critical Thinking Questions 1. Investment Selection (L04] Given that AK Steel was up by about 359 percent for 2016, why didn't all investors hold this stock? 2. Investment Selection (L04] Given that Endo International was down by 73 percent for 2016, why did some investors hold the stock? Why didn't they sell out before the price declined so sharply? 3. Risk and Return [LO2, 3] We have seen that over long periods, stock investments have tended to substantially outperform bond investments. However, it is common to observe investors with long horizons holding portfolios composed entirely of bonds. Are such investors irrational? 4. Market Efficiency Implications [104] Explain why a characteristic of an efficient market is that investments in that market have zero NPVs. 5. Efficient Markets Hypothesis [104] A stock market analyst is able to identify mispriced stocks by comparing the Page 415 average price for the last 10 days to the average price for the last 60 days. If this is true, what do you know about the market? 6. Semistrong Efficiency [LO4] If a market is semistrong form efficient, is it also weak form efficient? Explain. Concepts Review and Critical Thinking Questions 1. Investment Selection (L04] Given that AK Steel was up by about 359 percent for 2016, why didn't all investors hold this stock? 2. Investment Selection (L04] Given that Endo International was down by 73 percent for 2016, why did some investors hold the stock? Why didn't they sell out before the price declined so sharply? 3. Risk and Return [LO2, 3] We have seen that over long periods, stock investments have tended to substantially outperform bond investments. However, it is common to observe investors with long horizons holding portfolios composed entirely of bonds. Are such investors irrational? 4. Market Efficiency Implications [104] Explain why a characteristic of an efficient market is that investments in that market have zero NPVs. 5. Efficient Markets Hypothesis [104] A stock market analyst is able to identify mispriced stocks by comparing the Page 415 average price for the last 10 days to the average price for the last 60 days. If this is true, what do you know about the market? 6. Semistrong Efficiency [LO4] If a market is semistrong form efficient, is it also weak form efficient? Explain