Sign up  |  Log in

Study Session 13: Equity: Market Organization, Market Indices, and Market Efficiency

Momentum effect as evidence against?

I stumbled upon this question on schweser qbank :

If momentum effect persists over time, it would provide evidence against which of the following form of market efficiency?

A) Weak form only

B) Both weak form and semistrong form

C) Semistrong form only 

Answer : B

EPS for no par-value stock

In calculating the Weighted Average Shares Outstanding for the purpose of determining the basic earning per share, I was given the value (but not the number) of all the shares outstanding of a company at the beginning of the year (what the investors are willing to pay for 100% of the company), but those shares were originally issued by the company at no par value. How would I determine the number of shares outstanding at the beginning of the year given this information? Should I assume that par value is $0.01,and calculate the number of shares outstanding accordingly?

Three forms of market efficiency

A researcher who concludes that a market is not semi-strong form efficient will be most likely to also conclude that the market:

A. is not weak-form efficient

B. is not strong-form efficient

C. may be strong-form efficient

Answer and explain, thank you!

stop-buy order

A stop-buy order would most likely be used by:

   A.both bearish and bullish investors.

   B.bearish investors but not by bullish investors.

   C.bullish investors but not by bearish investors.

Please help…

Market Efficiency

Can anyone explain this question please :

“If a market is weak-form efficient, but semi-strong-form inefficient, then which of the following types of portfolio management is most likely to produce abnormal return?”

Answer: Active with fundamental analysis (not with technical nor passive)

Actually I’m not interested in the answer itself, as much as in understanding what does it mean to have a market that is weak-form efficient, but semi-strong-form inefficient?

Value of PR Index after stock split

Hi all, this is probably a basic concept I am missing, but need your help to find it.

According to CFA Curriculum, the Value of a Price Return Index is V= SUM(n x P)/D, where n is the number of shares, P is the price of each share and D is the divisor.

Characteristics of preference shares

All of the following are characteristics of preference shares except:

A. They are either callable or puttable

B. They generally do not have voting rights

C. They do not share in the operating performance of the company

I am very clear with option A and B, however; I am confused with option C. Because I think participating preference shares entitle shareholders to receive an additional dividend if the company’s profits exceed a predetermined level, which is related to operating performance??

Thanks in advance.

when to apply leverage ratio to rate of return?

Jason Williams purchased 500 shares of a company at $32 per share. The stock was bought on a 75% margin. One month later, Williams had to pay interest on the amount borrowed at a rate of 2% per month. At the time, Williams received a dividend of $0.50 per share. Immediately after he sold the shares at $28 per share. He paid commissions of $10 on the purchase and $10 on the sale of the stock. What was the rate of return on this investment for one month?

A. -12.5%

B. 15.4%

C. -50.1%

Information Cascade vs. Herding

Dear Team,

I have a question regarding the difference between information cascade and herding, as I didn’t get the difference between them.

Thanks in advance.