Are the following propositions true, false, or uncertain? For each statement, first state whether it is...

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Are the following propositions true, false, or uncertain? For each statement, first state whether it is true/false/uncertain, then explain your reasoning. You will be assessed on the quality of your explanation. (i) Tesla reported a profit of $270 million for 2020. At the same time, its share price rose by more than 700% in the same year. The fact that the stock market reacted positively to news of positive earnings suggests that it must be informationally efficient. (3 marks) (ii) In a CAPM world, a long put written on a positive beta stock has an expected return that is below the risk-free rate. (4 marks) (iii) Consider two stocks, X and Y, both with identical positive betas. In a CAPM world, a portfolio that is long and short equal dollar amounts in X and Y will have zero systematic risk and hence an expected return equal to the risk-free rate. (5 marks) Are the following propositions true, false, or uncertain? For each statement, first state whether it is true/false/uncertain, then explain your reasoning. You will be assessed on the quality of your explanation. (i) Tesla reported a profit of $270 million for 2020. At the same time, its share price rose by more than 700% in the same year. The fact that the stock market reacted positively to news of positive earnings suggests that it must be informationally efficient. (3 marks) (ii) In a CAPM world, a long put written on a positive beta stock has an expected return that is below the risk-free rate. (4 marks) (iii) Consider two stocks, X and Y, both with identical positive betas. In a CAPM world, a portfolio that is long and short equal dollar amounts in X and Y will have zero systematic risk and hence an expected return equal to the risk-free rate. (5 marks) Are the following propositions true, false, or uncertain? For each statement, first state whether it is true/false/uncertain, then explain your reasoning. You will be assessed on the quality of your explanation. (i) Tesla reported a profit of $270 million for 2020. At the same time, its share price rose by more than 700% in the same year. The fact that the stock market reacted positively to news of positive earnings suggests that it must be informationally efficient. (3 marks) (ii) In a CAPM world, a long put written on a positive beta stock has an expected return that is below the risk-free rate. (4 marks) (iii) Consider two stocks, X and Y, both with identical positive betas. In a CAPM world, a portfolio that is long and short equal dollar amounts in X and Y will have zero systematic risk and hence an expected return equal to the risk-free rate. (5 marks) Are the following propositions true, false, or uncertain? For each statement, first state whether it is true/false/uncertain, then explain your reasoning. You will be assessed on the quality of your explanation. (i) Tesla reported a profit of $270 million for 2020. At the same time, its share price rose by more than 700% in the same year. The fact that the stock market reacted positively to news of positive earnings suggests that it must be informationally efficient. (3 marks) (ii) In a CAPM world, a long put written on a positive beta stock has an expected return that is below the risk-free rate. (4 marks) (iii) Consider two stocks, X and Y, both with identical positive betas. In a CAPM world, a portfolio that is long and short equal dollar amounts in X and Y will have zero systematic risk and hence an expected return equal to the risk-free rate. (5 marks)

Answer rating: 100% (QA)

Sure lets break down each statement 1 Tesla reported a profit of 270 million for 2020 At the same time its share price rose by more than 700 in the sa... View the full answer