Learning Module 3 Market Efficiency

Which description best matches the concept of an informationally efficient market?

What is the principal difference between market value and intrinsic value as presented in the chapter?

Which factor is least likely to improve the informational efficiency of a country’s equity market?

Under Fama's classification, a market where prices reflect all historical prices and trading volume but not necessarily all public news is described as:

Which empirical method is most commonly used to test semi-strong efficiency in a market?

If a market is semi-strong efficient, which of the following actions is least likely to yield consistent abnormal returns after costs?

Which observation would most directly contradict weak-form market efficiency?

A researcher finds that stock prices on average rise significantly in the five trading days prior to year-end and fall in the first five trading days of January. Which anomaly does this pattern most closely describe?

Which empirical regularity is most often associated with the term 'momentum' in stock returns?

Which of the following is the best interpretation if an event study finds large statistically significant abnormal returns confined to the announcement date but no post-announcement drift?

Which anomaly is most closely associated with the historical finding that small-cap stocks, on average, have tended to earn higher risk-adjusted returns than large-cap stocks?

Which statement most accurately reflects the chapter’s stance on the persistence of anomalies?

Which of the following best illustrates the concept of bounds to arbitrage discussed in the chapter?

Which observation would be most consistent with evidence rejecting strong-form market efficiency?

Which of the following is an example of a calendar-based anomaly discussed in the chapter?

Which explanation did researchers propose for the January effect that links tax behavior to returns?

Which of the following is a common concern when interpreting empirical findings of market anomalies?

Which of the following best describes the role of fundamental analysis in a semi-strong efficient market, according to the chapter?

Which market feature makes technical analysis most unlikely to generate consistent abnormal returns in developed markets, according to the chapter?

Which of the following statements about IPOs does the chapter present as an observed pattern?

What role does information availability (financial disclosure and media) play in market efficiency, according to the chapter?

Which of these statements best characterizes the chapter’s view of short selling and market efficiency?

Which of the following is an implication of Grossman and Stiglitz's argument noted in the chapter?

In an event study, the 'excess return' is defined as:

Which of the following best summarizes the chapter's view on the role of behavioral finance in explaining market anomalies?

Loss aversion, a behavioral bias noted in the chapter, implies which investor behavior?

What is an information cascade as discussed in the chapter?

A study finds that stocks with unexpectedly high earnings surprises continue to outperform for several months after the announcement. Which critique of this finding is emphasized in the chapter?

Which of the following statements about closed-end fund discounts is consistent with the chapter's discussion?

Which of the following best summarizes the chapter's recommendation for investors deciding between active and passive strategies in developed markets?

Which methodology is most often used to detect momentum profits in stock returns as described in the chapter?

Which of the following best captures the chapter's explanation of why some anomalies disappeared over time?

Which of the following is an accurate description of the 'value effect' as discussed in the chapter?

Which of the following best captures the chapter's treatment of hedge fund indexes?

Which of the following is a key empirical finding regarding stock price reactions to earnings announcements, as described in the chapter?

Which of these best describes 'survivorship bias' discussed in the chapter with respect to hedge fund and other performance databases?

Which of the following best describes an implication of semi-strong efficiency for corporate disclosure policy?

Which statement best reflects the chapter’s discussion on the relationship between liquidity and the ability to replicate an index or hedge a position?

Which of the following is a behavioral explanation for momentum documented in the chapter?

Which regulatory rule discussed in the chapter aims to ensure fair public disclosure of material information by issuers?

Which of the following best describes the chapter’s view on the relationship between behavioral biases and market efficiency?

Which market would you expect to be most likely to exhibit semi-strong inefficiency, based on factors discussed in the chapter?

Which test or evidence would most directly challenge the weak-form efficient market hypothesis?

Which of the following best reflects the chapter's discussion of why fixed-income indexing is more difficult than equity indexing?

Which of the following is a commonly documented return pattern after a firm is added to a major index (e.g., Russell reconstitution), as discussed in the chapter's examples on index reconstitution?

Which of the following best characterizes the 'overreaction' anomaly described in the chapter?

Which of these findings would provide the strongest evidence that a market is not semi-strong efficient?

Which of the following best describes the chapter's advice for evaluating a reported anomaly?

Which of the following best represents an argument for the existence of momentum that is consistent with market efficiency (a rational explanation)?

Which practical conclusion for an investment committee is most aligned with the chapter’s conclusions on market efficiency?