Question

1. A stock produced annual rates of return of 12 percent, −16 percent, 12 percent, and...

1.

A stock produced annual rates of return of 12 percent, −16 percent, 12 percent, and 16 percent over the past 4 years, respectively. What is the geometric average return for this period?

5.15 percent

5.64 percent

5.27 percent

5.91 percent

2.

Corporate insiders could NOT benefit financially from the inside information they posses in which type of market?

semiweak form efficient

weak form efficient

strong form efficient

semistrong form efficient

3.

Assume that the market prices of the securities that trade in a particular market fairly reflect the available information related to those securities. Which one of the following terms best defines that market?

riskless market

evenly distributed market

zero volatility market

Blume's market

efficient capital market

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Answer #1

1.

=((1+12%)*(1-16%)*(1+12%)*(1+16%))^(1/4)-1

=5.1461%

2.

Strong form efficient

3.

Efficient capital market

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