The theory that security prices fully reflect all available information is called the

efficient market hypothesis. random walk theory. unexploited profit theory. Fisher effect.

A stronger version of the efficient market hypothesis is based on the condition that
the equilibrium price of a security reflects the optimal forecast of the return. the equilibrium price of a security cannot be forecast. the market price of a security reflects the equilibrium return. the market price of a security reflects market fundamentals. the market price of a security reflects the optimal forecast of the return.

In an efficient financial market

there will be no profit opportunities to exploit. everyone must be well informed about a security's fundamentals. all relevant information must be publicly available. unexploited profit opportunities must be zero on average.

Evidence from studies of the performance of mutual funds supports the efficient market hypothesis because funds that do _____ in the first period _____ the market in the

second.
poorly; beat poorly; do not beat well; do not beat well; also beat

Technical analysis applied to foreign exchange markets is based on the idea that
use of public information about exchange rates will not allow profitable trading opportunities. expected future changes in exchange rates should be zero. trends and regular cycles in exchange rates should allow profitable trading opportunities. future changes in exchange rates should be zero.

Among the anomalies that call the efficient market hypothesis into question, evidence on _____ remains controversial.
the small-firm effect mean reversion excessive volatility the January effect

If you have received emails that correctly predicted the direction of the stock market over the last 9 weeks, should you pay to get a prediction for next week?

Yes, the sender obviously has valuable inside information. No, a con game could have produced the same chain of correct predictions. Yes, the chain of correct predictions shows that the sender has valuable skills in financial analysis. No, having been correct so consistently in the past the sender is more likely to be wrong next week.

The stock market crash of 1987 and the techladen NASDAQ crash of 2000 convinced many financial economists that
technical analysis based on the institutional structure of the marketplace can be profitable. market participants are unable to eliminate unexploited profit opportunities. asset prices do not reflect fundamental values. rational bubbles can only last for a short time.

Behavioral finance applies concepts from _____ to understand the behavior of securities' prices.
psychology physics biology economics

Which of the following supports the efficient market hypothesis?

Fluctuations in stocks' prices are larger than fluctuations in their fundamental values.

Stock prices rise predictably from December to January. Stock prices continue to rise for some time following unexpectedly high profits. All of the above. None of the above.