Quiz Ch 07 – T/F Professional Investors and Index Funds
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: Numerous professional investors aim to outperform the market through the purchase of index funds.
True or false: Numerous professional investors aim to outperform the market through the purchase of index funds.
True or false: In the context of the random walk theory, it holds true that, on any given day, the probability of a price increase or decrease is approximately equal.
True or false: In the context of stock prices following a random walk, their values are unrelated to the actual activities of the company.
True or false: Successive stock prices show no correlation in a scenario where stock prices adhere to a random walk.
True or false: Both the dividend yield of a stock and the current yield of a bond ignore potential capital gains or losses.
True or false: There should be an equilibrium between the anticipated rate of return and the risk among securities with similar expected risk.
True or false: The observation that stock prices adhere to a random walk does NOT rule out the presence of predictable price cycles.
True or false: In contrast to book value and liquidation value, market value considers the firm as a going concern.
True or false: The firm’s book value is the same as the firm’s liquidation value.
True or false: When dividends are not growing, the dividend discount model is not the right choice for valuing stocks.