Which of the following statements regarding net present value (NPV) is CORRECT?

1. NPV is the market value of a firm minus its intrinsic value
2. If a firm's NPV is positive, then the firm is undervalued so investors should invest in this firm
3. Both (a) and (b) are correct

Which of the following statements about active equity investing is INCORRECT?

(a) The key idea of Fundamental Analysis is that if you know the intrinsic value of an asset, then should buy this asset when its price is below its intrinsic value

() The key idea of Technical Analysis is that the past movements of an asset's prices can predict its future movements, therefore you should buy this asset when its price is expected to move up

(c) Both Fundamental Analysis and Technical Analysis suggest that you should NOT buy an asset when its price is above its intrinsic value

Which of the following statements about the portfolio construction is CORRECT?

1. The portfolio construction can gain diversification benefits because a portfolio of similar stocks captures the commonality in price movements of these stocks
2. The portfolio construction can address the signal-to-noise issue because a portfolio of stocks is less risky than each of these stocks
3. Both (a) and (b) are wrong

Which of the following statements about momentum investing is CORRECT?

1. The momentum strategy buys past winners and sells past losers; the winners (losers) are stor with a good (bad) past-36 month cumulative return
2. The winner portfolio has a higher return and higher risk than the loser portfolio, consistent the risk-reward trade-off and that investors are risk-averse
3. Both (a) and (b) are wrong