ECONOMICS

11. Which of these is the line on a graph of return and risk (standard deviation) from the risk-free rate through the market portfolio?
A. Capital Asset Pricing Line
B. Capital Market Line
C. Efficient Market Line
D. Efficient Market Hypothesis

 

12. A measure of the sensitivity of a stock or portfolio to market risk.
A. behavioral finance
B. beta
C. efficient market
D. hedge

 

13. Similar to the Capital Market Line except risk is characterized by beta instead of standard deviation.
A. Market Risk Line
B. Probability Market Line
C. Security Market Line
D. Stock Market Line

 

14. Which of these is the measurement of risk for a collection of stocks for an investor?
A. beta
B. efficient market
C. expected return
D. portfolio beta

 

15. Which of the following is NOT a necessary condition for an efficient market?
A. Many buyers and sellers.
B. No prohibitively high barriers to entry.
C. Free and readily available information available to all participants.
D. No trading or transaction costs.

 

16. The stocks of small companies that are priced below $1 per share.
A. bargain stocks
B. hedge fund stocks
C. penny stocks
D. stock market bubble stocks

 

17. A theory that describes the types of information that are reflected in current stock prices.
A. asset pricing
B. behavioral finance
C. efficient market hypothesis
D. public information

 

18. This is data that includes past stock prices and volume, financial statements, corporate news, analyst opinions, etc.
A. audited financial statements
B. generally accepted accounting principles
C. privately held information
D. public information

 

19. This has not been released to the public, but is known by few individuals, likely company insiders.
A. audited financial statements
B. restricted stock
C. privately held information
D. insider trading

 

20. Investor enthusiasm causes an inflated bull market that drives prices too high, ending in a dramatic collapse in prices.
A. behavior finance
B. efficient market
C. privately held information
D. stock market bubble

 

21. The study of the cognitive processes and biases associated with making financial and economic decisions.
A. asset pricing model
B. behavioral finance
C. efficient market hypothesis
D. stock market bubble

 

22. Shares of stock issued to employees that have limitations on when they can be sold.
A. executive stock options
B. privately held information
C. restricted stock
D. stock market bubble

 

23. Special rights given to some employees to buy a specific number of shares of the company stock at a fixed price during a specific period of time.
A. executive stock options
B. privately held information
C. restricted stock
D. stock market bubble

 

24. The constant growth model assumes which of the following?
A. That there is privately held information.
B. That the stock is efficiently priced.
C. That there are executive stock options available to managers.
D. That there is no restricted stock.

 

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