Security Analysis Homework! Help needed #11

11. The magic formula is a stock-picking strategy, that is, it picks individual stocks and not ? portfolio of stocks. A) True B) False 12. Which statements below are true for the magic formula portfolio? A) it exhibits attractive short-term performance. B) when selecting among the largest 3500 stocks, the magic formula portfolio always has positive returns for 3 -year time periods. C) when selecting among the largest 3500 stocks, the magic formula portfolio always beats market returns for 3 -year time periods. D) all of the above. E) only B) and C) of the above. 13. Joel Greenblatt in the Little Book that Beats the Market considers the following risk(s) in order to evaluate the riskiness of the magic formula portfolio. A) absolute risk. B) systematic risk. C) relative risk. D) Only A) and B) of the above. E) Only A) and C) of the above. 14. Joel Greenblatt claims that Mr. Market may be irrational in the short-run but he is actually a very rational fellow in the long-run. Which reasons make Mr. Market rational in the long-run? A) The market for corporate control (takeover activity). B) Stock buybacks. C) Smart investors searching for bargain opportunities after uncertainty about the prospects for a particular company over the near term that keeps potential buyers away is resolved. D) All of the above. E) Only A) and B) of the above