FIN 303 T/F test banks

False (portfolio SD< weighted avererage of Individual SDs)

half of your portfolio is in stock A, which has a standard deviation of retursn of 30% and half of your portfolio is in stock B, which also has a standard deviation of returns of 30%, then the standard deviation of your portfolio is 30%

true (portfolio SD< weighted average of individual SDs)

if half of your portfolio is in stock A, which has a standard deviation of returns of 30% and half of your portfolio is in stock B, which also has a standard deviation of retursns of 30%, then the standard deviation of your portfolio is not 30%

True (portfolio SD< weighted average of individual SDs)

if half of your portfolio is in stock A, which has a standard deviation of returns of 40% and half of your portfolio is in stock B, which has a standard deviation of returns of 20%, then the standard deviation of your portfolio is 30%

True (portfolio SD<weighted average of individual SDs)

if half of your portfolio is in stock A, which has a standard deviation of returns of 40% and half of your portfolio is in stock B, which has a standard deviation of returns of 20%, then the standard deviation of your portfolio is not 30%

true (insider trading is illegal and should not be considered as a potential approach to investing)

according to the class overheads and basic ethics insider trading is illegal and should not be considered as a potential approach to investing

false (no predicatable benefit from fundamental analysis in semi strong form efficient markets)

if your analysis involves analyzing publicaly available company financial statements government data, and industry reports and attempting to identify stocks that are undervalued, then there would be no potential predictable benefits from your analysis in markets that are semi strong form efficient

false (the announced growth<expected, so “bad” news and price likely decreased)

: Based on the information, the price of Thunder Hospitality stock likely increased immediately after the announcement about future dividends. Here’s the information – Thunder Hospitality has increased its annual dividend by 2.2 percent per year for each of the past 28 years. Recently, the company has been experiencing very high levels of growth, so market experts and investors anticipated that the firm would announce that it expects dividends to increase by 5.1 percent per year forever. This morning, Thunder Hospitality announced that it expects dividends to increase by 4.3 percent per year forever, which would be a larger increase than any annual dividend increase in the company’s history. The amount of the expected dividend increase was not known before the announcement, so the announcement can be considered the release of new information.  No other news was released except the expected dividend increase and the stock’s risk is expected to remain unchanged.  Markets are semi-strong form efficient.

true (the announced growth rate<expected, so “bad” news and price likely decreased")

Based on the information, the price of Thunder Hospitality stock likely decreased immediately after the announcement about future dividends. Here’s the information – Thunder Hospitality has increased its annual dividend by 2.2 percent per year for each of the past 28 years. Recently, the company has been experiencing very high levels of growth, so market experts and investors anticipated that the firm would announce that it expects dividends to increase by 5.1 percent per year forever. This morning, Thunder Hospitality announced that it expects dividends to increase by 4.3 percent per year forever, which would be a larger increase than any annual dividend increase in the company’s history. The amount of the expected dividend increase was not known before the announcement, so the announcement can be considered the release of new information.  No other news was released except the expected dividend increase and the stock’s risk is expected to remain unchanged.  Markets are semi-strong form efficient.

false (the announced growth rate=expected, so “neutral news and price likely unchanged)

Based on the information, the price of Thunder Hospitality stock likely increased immediately after the announcement about future dividends. Here’s the information – Thunder Hospitality has increased its annual dividend by 2.2 percent per year for each of the past 28 years. Recently, the company has been experiencing very high levels of growth, so market experts and investors anticipated that the firm would announce that it expects dividends to increase by 5.1 percent per year forever. This morning, Thunder Hospitality announced that it expects dividends to increase by 5.1 percent per year forever, which would be a larger increase than any annual dividend increase in the company’s history. The amount of the expected dividend increase was not known before the announcement, so the announcement can be considered the release of new information.  No other news was released except the expected dividend increase and the stock’s risk is expected to remain unchanged.  Markets are semi-strong form efficient.

false (the announced growth rate=expected, so “neutral” news and price likely unchanged)

Based on the information, the price of Thunder Hospitality stock likely decreased immediately after the announcement about future dividends. Here’s the information – Thunder Hospitality has increased its annual dividend by 2.2 percent per year for each of the past 28 years. Recently, the company has been experiencing very high levels of growth, so market experts and investors anticipated that the firm would announce that it expects dividends to increase by 5.1 percent per year forever. This morning, Thunder Hospitality announced that it expects dividends to increase by 5.1 percent per year forever, which would be a larger increase than any annual dividend increase in the company’s history. The amount of the expected dividend increase was not known before the announcement, so the announcement can be considered the release of new information.  No other news was released except the expected dividend increase and the stock’s risk is expected to remain unchanged.  Markets are semi-strong form efficient.

true (the announced growth rate>expected, so “good” news and price likely increased)

Based on the information, the price of Thunder Hospitality stock likely decreased immediately after the announcement about future dividends. Here’s the information – Thunder Hospitality has increased its annual dividend by 2.2 percent per year for each of the past 28 years. Recently, the company has been experiencing very high levels of growth, so market experts and investors anticipated that the firm would announce that it expects dividends to increase by 5.1 percent per year forever. This morning, Thunder Hospitality announced that it expects dividends to increase by 5.1 percent per year forever, which would be a larger increase than any annual dividend increase in the company’s history. The amount of the expected dividend increase was not known before the announcement, so the announcement can be considered the release of new information.  No other news was released except the expected dividend increase and the stock’s risk is expected to remain unchanged.  Markets are semi-strong form efficient.

false (the announced growth rate> expected so “good” news and price likely increased)

Based on the information, the price of Thunder Hospitality stock likely decreased immediately after the announcement about future dividends. Here’s the information – Thunder Hospitality has increased its annual dividend by 2.2 percent per year for each of the past 28 years.  Recently, the company has been experiencing very low levels of growth, so market experts and investors anticipated that the firm would announce that it expects dividends to decrease by 5.1 percent per year forever. This morning, Thunder Hospitality announced that it expects dividends to decrease by 4.3 percent per year forever, which would be a larger decrease than any annual dividend decrease in the company’s history. The amount of the expected dividend decrease was not known before the announcement, so the announcement can be considered the release of new information.  No other news was released except the expected dividend decrease and the stock’s risk is expected to remain unchanged.  Markets are semi-strong form efficient.

False (the announced growth rate = expected, so “neutral” news and price likely unchanged)

Based on the information, the price of Thunder Hospitality stock likely increased immediately after the announcement about future dividends. Here’s the information – Thunder Hospitality has increased its annual dividend by 2.2 percent per year for each of the past 28 years.  Recently, the company has been experiencing very low levels of growth, so market experts and investors anticipated that the firm would announce that it expects dividends to decrease by 5.1 percent per year forever. This morning, Thunder Hospitality announced that it expects dividends to decrease by 5.1 percent per year forever, which would be a larger decrease than any annual dividend decrease in the company’s history. The amount of the expected dividend decrease was not known before the announcement, so the announcement can be considered the release of new information.  No other news was released except the expected dividend decrease and the stock’s risk is expected to remain unchanged.  Markets are semi-strong form efficient.

false (the announced growth rate = expected, so “neutral” news and price likely unchanged)

Based on the information, the price of Thunder Hospitality stock likely decreased immediately after the announcement about future dividends. Here’s the information – Thunder Hospitality has increased its annual dividend by 2.2 percent per year for each of the past 28 years.  Recently, the company has been experiencing very low levels of growth, so market experts and investors anticipated that the firm would announce that it expects dividends to decrease by 5.1 percent per year forever. This morning, Thunder Hospitality announced that it expects dividends to decrease by 5.1 percent per year forever, which would be a larger decrease than any annual dividend decrease in the company’s history. The amount of the expected dividend decrease was not known before the announcement, so the announcement can be considered the release of new information.  No other news was released except the expected dividend decrease and the stock’s risk is expected to remain unchanged.  Markets are semi-strong form efficient.

false (individual stock likely affected by macro news)

on a given day, the systematic portion of a single stocks unexpected return would likely be zero true

true (individual stock liekly affected by macro news)

on a given day, the systematic portion of a single stocks unexpected return would likley not be zero

false ( indivudal stock likely affected by individual news)

on a given day, the unsystematic portion of a single stocks unexpected return would likely be zero on a

true

on a given day the unsystematic portion of a single stock unexpected return would likely not be zero

false (well diversified liklely affected by macro news, since systematic cant be diversified away)

on a given day the systematic portion of a well diversified portfolios unexpected return would likley be zero on a

true( well diversified likely affected by macro news, since systematic cant be diversified away)

on a given day, the systematic portion of a well diversfied portfolios unexpected return would likely not be zero