Which of the following statements regarding P/E multiple is NOT correct? Group of answer choices A stock with a low P/E multiple indicates that the stock is undervalued. A firm's risk does not affect its P/E multiple. Two statements are NOT correct. A firm’s high P/E multiple may be attributed to a temporary decrease in its EPS. A firm’s growth potential affects its P/E multiple.

A stock that does not pay a dividend must have a capital gains yield that is equal to the required return. Select one: True False

Due to its risk characteristics compared to the ordinary preferred stock, cumalitive preferred should present a ____ expected return.  - lower - higher  - same amount?

Based on the CAPM, Jensen's Alpha of a firm a) equals zero if the firm's stock returns have underperformed as compared to the market after adjusting for its beta risk. b) is positive if the firm's stock returns have overperformed as compared to the market after adjusting for its beta risk. c) is negative if the firm's stock returns have overperformed as compared to the market after adjusting for its beta risk. d) equals one if the firm's stock returns have underperformed as compared to the market after adjusting for its beta risk.

Which of the following statement is true? (a) Correlation has no effect on the expected return of a portfolio. (b) As the correlation between two stocks increases, the volatility of the two-stock portfolio falls. (c) The correlation of a stock's return with itself is zero. (d) None of the above

A stock’s beta will be negative if:   Its returns are positively correlated with market index returns. Its returns are negatively correlated with market index returns Its stock price has historically been very stable Market demand for the firm’s shares is very low

True or False:  Technical Analysis (the practice of analyzing past stock price and volume data in order to predict future stock price behavior) would be useless under any form of the Efficient Market Hypothesis (EMH). Group of answer choices True False

“There is no alpha in an efficient market”. In light of this statement, briefly describe market efficiency and its forms and why an investor may not be able to locate stocks that provide a positive alpha (undervalued stocks) consistently

Suppose we observe from market data that, for a given non-dividend paying stock, F, ± Soer. What might explain the inequality in this relationship (i.e. why don't we observe Fo = Soer") if markets are efficient? Hint: try to identify real-world market frictions that might cause cases where F, + S,e! does not result in arbitrage opportunities rT