The market efficiency hypothesis claims that, as a rule, the market value and intrinsic value of a security are equal.

Q: Question: Market Value 1. What kinds of liabilities are there in the market to be purchased?

A: Market value is a crucial concept in the realm of finance and economics, representing the current…

Q: Compare M&M Theorem Proposition 1 and Proposition 2 in perfectly efficient market and in the real…

A: The M&M (Modigliani & Miller) approach is used to make investment decisions easily by…

Q: What are the components of the risk-free rate?

A: risk free asset: it is the asset which does not carry any risk.

Q: Carefully explain the Arbitrage Pricing Theory (APT). What is the main assumption the APT is built…

A: Market efficiency Market efficiency theory states that all information whether it is private or…

Q: Give a definition of a "return". Why do we need to incorporate risk into return (discount rate)?

A: Investment: An investment is when money is used now with the goal of increasing its value later. In…

Q: The hypothesis that market prices reflect all publicly-available information is called efficiency in…

A: Efficiency of stock market is determined by the effect of information whether publicly available or…

Q: Market risk cannot be eliminated. OA. True OB. False

A: The financial market can be defined as the market place which includes the trading of securities and…

Q: Are you agree with the phrase(sentence): "The indifference (exchange) risk - return curve slop of a…

A: Exchange rate indifference curve indicates that the change in demand for goods and services with…

Q: What does it mean for markets to be efficient? What are the differences in the degree of efficiency,…

A: The markets are considered to be efficient if the information related to various aspects that create…

Q: Does the Efficient Market Hypothesi hold true? Why or why not?

A: The efficiency of the market relates to how efficiently prices represent all available information.…

Q: What is a replicating portfolio, and how is it used to find the valueof a derivative security?

A: Portfolio is a collection of investments held by an investor. Replicating portfolio is a financial…

Q: Define spot markets

A: A place where numerous sellers, as well as buyers, come together for exchanging services and…

Q: ate two reasons why the strong form of market efficient is important

A: Efficient market hypothesis is very important concept in the stock market analysis and understanding…

Q: Define weak form tests of market efficiency and their main objective. Describe in detail the three…

A: As per Weak Form Tests of Market Efficiency, based on the record of volumes and price movements of…

Q: What is the market model? How is it different from the SML forthe CAPM?

A: The market model is utilized to show how forces of supply and demand powers cooperate to decide…

Q: According to the capital asset pricing model, a security with a _________. A. negative alpha is…

A: Introduction : Capital asset pricing model commonly known as the CAPM model is the metric to compute…

Q: Two basic assumptions of technical analysis are that security prices adjust:a. Gradually to new…

A: Technical analysis is the study of every possible pattern of stock price over  multiple timeperiod…

Q: The slope of the security market line cannot be negative. Begin your answer with Consistent or…

A: Inconsistent. Capital Asset Pricing Model is used to determine the relationship between the expected…

Q: If markets are efficient, how is it possible that market bubbles and crashes occur?

A: An efficient market hypothesis is an approach to the financial market that states that the financial…

Q: According to Capital Asset Pricing theory (CAPM), in a competitive marketplace: Group of answer…

A: Capital Asset Pricing Model(CAPM) is an investment tool used to determine the fair valuation of…

Q: The Security Market Line plots _________ against ___________?

A: Systematic risk is the market risk or the undiversifiable risk which affects the overall market.…

Q: Thoroughly discuss the concept of Market Efficiency and evidence for and against it.

A: The market efficiency will be reflective of a concept which will help in understanding the degree of…

Q: Define strong form of market efficiency

A: Strong form of market efficiency is considered to be the strongest form of efficient market…

Q: O The market rate of return. O Zero rate of return. A negative rate of return. O The risk-free rate.

A: Expected rate on security depends on the risk free rate and market rate and risk related to security…

Q: what are the sssumptions about market efficiency?

A: The theory that states that all the information available in the capital market is reflected in the…

Q: Explain how the concept of comparable risk is incorporated into the discount rate.

A: The concept of comparable risk is fundamental to determining the appropriate discount rate to use…

Q: How is it possible to achieve a higher rate of return without significantlyincreasing risk?

A: As we all learnes till now that higher the risk provides higher return and if we want the high…

Q: Explain Total Return Swap?

A: Swaps are agreement between different businesses and financial institutions  which is customized as…

Q: Define weak form of market efficiency

A: Efficient Market Hypothesis is a hypothesis that states that the asset prices reflect all available…

Q: Are you agree with the - return curve slop of a risky has a negative slop."? explain why?**…

A: The exchange rate indifference curve is the curve between the exchange rate and demand for given…

Q: What are the implications of interest rate parity theorem.

A: Interest rate Parity:- The interest rate parity (IRP) theory states that the difference between the…

Q: What is the expected return of a zero-beta security?a. Market rate of return.b. Zero rate of…

A: Expected return: Expected returns are proceeds or losses that a depositor anticipates to attain…

Q: When the quantity of a financial security supplied or demanded changes at every given interest rate…

A: Explanation: Interest rate shifts (i.e., the price of financial capital) are creating a shift along…

Q: why is there a trade-off between liquidity and solvency?

A: A firm may raise capital through different sources, including equity shares, preference shares,…

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.