Your friend, John, believes that since capital markets are efficient, he doesn't need to read the financial press or
be involved in stock research before purchasing stocks for his portfolio.
He simply throws darts at the stock
pages and buys the stocks the darts hit. Is stock research and analysis important when buying and selling stocks
in an efficient market?
Yes! Efficient capital markets theory suggests that investors will not be able to outperform the market in the long-run
using just publicly available information. This is due to the fact that market prices very quickly adjust to information. If
an investor only knows what all other investors know, then he or she cannot use that information to earn abnormal
returns. However, an uninformed investor can certainly underperform the market.
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Juanita's mother lives with her. Juanita purchased clothing for her mother costing $1,000 and provided her with a room that Juanita estimates she could have rented for $4,000. Juanita spent $5,000 on groceries she shared with her mother. Juanita also paid $700 for her mother's health insurance coverage. How much of these costs is considered support?
A. $10,700 B. $8,200 C. $5,000 D. $10,000
The payments portion of the balance of payments--that is, payments made by the United States--does not include
A. exports. B. imports. C. military spending. D. foreign aid. E. investments.
The management of Plotnik Corporation is investigating purchasing equipment that would increase sales revenues by $269,000 per year and cash operating expenses by $156,000 per year. The equipment would cost $294,000 and have a 6 year life with no salvage value. The simple rate of return on the investment is closest to (Ignore income taxes.):
A. 23.8% B. 38.4% C. 21.8% D. 16.7%
Hilo tells the Internal Revenue Service that Jon “cheated on his taxes.” This can lead to Hilo’s liability for defamation if the statement is
A. contemptuous. B. an opinion. C. true. D. false.