Question 1

Financing decisions are less easily reversed than investment decisions.

True

False

Question 2

If markets are efficient in the semi-strong form, prices will reflect all historical price information.

True

False

Question 3

Psychologists have observed that people tend to place too much weight on older information.

True

False

Question 4

The random walk theory with its implication that stock price movements are like roulette outcomes, is a powerful indictment of our capital markets.

True

False

Question 5

The evidence that stocks of companies with unexpectedly high earnings offer high returns for several months after the announcement violates weak form market efficiency.

True

False

Question 6

In the United States most common shares are purchased by individuals.

True

False

Question 7

Net stock issues by U.S. nonfinancial corporations are in most years small and negative.

True

False

Question 8

Investments in partnerships cannot be publicly traded.

True

False

Question 9

Debt ratios in the U.S. have generally increased slightly over the past 50 years.

True

False

Question 10

A subordinated bond will generally be priced less than a secured bond.

True

False

Question 11

Explain why a monopoly will rationally choose to produce less than the competitive solution.