Assume that the information system is so advanced that the market, as confirmed by numerous unbiased studies, is efficient. Investment firms therefore decide to retire all portfolio managers and financial analysts and let random choice govern the security selection process. What impact will this action have on market efficiency?
Answer to relevant QuestionsWould you expect investors to be more overconfident during a boom or a recession? Why?List the correct book-keeping entries when a firm sells $40,000 worth of inventories for $70,000 using credit sales.A firm borrowed $2 million and paid 10 percent interest this year. It also paid a dividend of $1 per share on 500,000 shares outstanding. What is the firm’s cash flow from financing?Prince Rupert Fly ‘n’ Fish Inc. purchases one small plane in its first year of business for $70,000. In year 2, it purchases another plane for $90,000. Find the UCC at the end of year 3 if the CCA rate for aircraft is 25 ...Based on the figures in practice problems 17 and 18, how much money did the shareholders actually invest in the firm (i.e., what is the value of the capital stock)?
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