Question
These questions are complete question, I just want answer of them. Suppose the market is in the form of semi-strong efficiency, which of the following
These questions are complete question, I just want answer of them.
Suppose the market is in the form of semi-strong efficiency, which of the following is NOT true?
A. The market is also weak-form efficient.
B. Any public information is immediately incorporated into security prices.
C. The market is also in the strong form of efficiency.
D. One cannot generate positive NPV by trading in the financial market without private information.
E. One cannot find arbitrage opportunities without private information.
Which of the following is true:
A. The present value calculation only applies to safe cash flows but not risky cash flows.
B. The present value of a stream of cash flows cannot be negative.
C. For the same company, the present value of its stock must be higher than the present value of its debt.
D. The present value calculation takes into account of both the time value of money and risk adjustment.
E. The present value formula does not apply if expected cash flows are negative.
Which of the following is NOT true?
A. If tax is the only friction, then all firms should take zero debt.
B. If there are no frictions, MM suggests that the level of leverage does not aect firm value.
C. If there are no frictions, MM suggests that the manager cannot create value by changing the capital
structure of the firm.
D. With both tax and cost of financial distress, optimal leverage can be dierent for dierent industries.
E. According to the trade-o theory, if two firms face the same tax rate, then the dierence in leverage can
only be explained by the dierence in expected distress cost.
Which of following is NOT true?
A. If the CAPM holds, and stock A has higher expected return than stock B, then A must have higher
market beta than B.
B. If the CAPM holds, the market portfolio must have higher expected return than the risk-free rate.
C. The CAPM states that the tangent portfolio is identical to the market portfolio.
D. If CAPM holds, then the market portfolio is on the CML.
E. If the CAPM does not hold, then the CML does not exist.
Which of the following is NOT true?
A. A 5-year zero-coupon treasury note must have higher duration than a 3-year STRIPS.
B. The yield-to-maturity of a bond cannot be higher than the highest spot rate in the yield curve.
C. If two treasury bonds have the same maturity, face value and compounding frequency, then the one with
the higher coupon rate should be traded at a higher price.
D. If a bond has safe cash flows, then it's a risk-free bond so that it's not subject to interest rate risks.
E. If the market is efficient, then the present value of the cash flows of a bond is the same as its trading
price.
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