Explain why the efficient markets hypothesis implies that a well-run company is not necessarily a good investment.
Question:
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 43% (16 reviews)
An efficient market will recognize the talent of a firms managers and pr...View the full answer
Answered By
Carly Cimino
As a tutor, my focus is to help communicate and break down difficult concepts in a way that allows students greater accessibility and comprehension to their course material. I love helping others develop a sense of personal confidence and curiosity, and I'm looking forward to the chance to interact and work with you professionally and better your academic grades.
4.30+
12+ Reviews
21+ Question Solved
Related Book For
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
Question Posted:
Students also viewed these Corporate Finance questions
-
The efficient markets hypothesis implies that all mutual funds should obtain the same expected risk-adjusted returns. Therefore, we can simply pick mutual funds at random. Is this statement true or...
-
Explain why a straddle is not necessarily a good strategy when the underlying event is well known to everyone?
-
Why are supporters of the efficient markets hypothesis unconvinced that differences between the theoretical and actual behavior of financial markets actually invalidate the hypothesis?
-
Figure 2 shows a 250 kg beam BC at the time instant when a 100 N horizontal force is applied to its end B for 10 s. a. Determine the tension in rods AB and CD at an arbitrary instant during the time...
-
Why is giving an alternative or a compromise, if one exists, a good idea?
-
Jody borrowed 2 5 0 0 0 from her controlled corporation for six months. She used the funds to pay her daughters college tuition. The corporation charged Jody 4 % interest. The federal rate was 5 % ....
-
A material having the properties given in Problem 4.3 is subjected to a biaxial tension test, and the biaxial failure stress is found to be \(\sigma_{1}=\sigma_{2}=35 \mathrm{MPa}\). Determine the...
-
A 5.0-m 3 tank is charged with 75.0 kg of propane gas at 25C. Use the SRK equation of state to estimate the pressure in the tank: then calculate the percentage error that would result from the use of...
-
Jason launched a new ad and it has brought an influx of customers to his lawn mowing business. He has a limited amount of employees and wants to make sure he can handle all the new work before...
-
Government actions such as price floors and price ceilings can actually increase unemployment and reduce market efficiency. True or False
-
A stock has a beta equal to 1.0. Is the standard deviation of the stock equal to the standard deviation of the market?
-
a. Suppose that, over the long run, the risk-premium on stocks relative to Treasury bills has been 7.6 % in the United States. Suppose also that the current Treasury bill yield is 1.5%, but the...
-
A pair of lines in R 3 are said to be skew if they are neither parallel nor intersecting. Determine whether the following pairs of lines are parallel, intersecting, or skew. If the lines intersect,...
-
As part of the initial investment Ray Blake Contributes Equipment that had Originally cost $112,000 and which Accumulated depreciation of $84,150 has been recorded. If similar equipment would cost...
-
How does labor cost allocation and staffing effectiveness impact the economic health of an institution/department?
-
Jack has not filed a Federal tax return in 10 years. In each of those years, his business earned a net income of $1,000,000. Upon an IRS audit, what tax penalties is Jack likely to incur? What type...
-
1. As an Austrian-Thai company, Red Bull has done a remarkable job of positioning itself internationally by coming across as a local company in every country where Red Bull is sold. Would you be more...
-
Greeny Company is an eco - friendly manufacturing company. It provided the following information regarding its first year of operations: Administrative salaries $ 9 4 , 7 2 0 Factory depreciation $ 2...
-
Derive a centered finite difference formula for the second derivative using four evaluation points.
-
Give an example of transitory income. What effect does this income have on the marginal propensity to consume?
-
A water jet is deflected through \(180^{\circ}\) by a vane that is attached to a cart, which is free to move. Assume that the flow along the vane is frictionless and neglect gravity. The jet enters...
-
Markum Enterprises is considering permanently adding $100 million of debt to its capital structure. Markums corporate tax rate is 35%. a. Absent personal taxes, what is the value of the interest tax...
-
Garnet Corporation is considering issuing risk-free debt or risk-free preferred stock. The tax rate on interest income is 35%, and the tax rate on dividends or capital gains from preferred stock is...
-
Suppose the tax rate on interest income is 35%, and the average tax rate on capital gains and dividend income is 10%. How high must the marginal corporate tax rate be for debt to offer a tax...
-
Consider the graphs of the following lines. y = y = 3 - -x+ 2 3x 5 Ex + 5 2 Find the slope m of each each line. y = + m = 2 y = -x+ m2= Are the graphs of these lines perpendicular, parallel, or...
-
Use composition to verify if the given pairs are inverses of each other. 41. f(x)=3x+6 8(x) = 1 -2 3 x-2 42. f(x)=-2x+4 8(x)=x- x+2 2
-
what are six differences in how expenditures are accrued in governments versus businesses.
Study smarter with the SolutionInn App