Portfolio Management Quiz 3

1 Types of market efficiency

efficiency: This implies low friction in trading on the market

efficiency: This implies that ____ available to participants affects market prices quickly and cost effectively.

efficiency: This implies that the prices set for all securities are 'correct' in the sense that they force the market to ____ capital in the way that maximizes the current and future productive capacity of the capital stock of the economy.

2

Adherents of the believe that all stocks can be measured relative to a benchmark, the market portfolio.

3

The considers the arrival and use of information on the market, and the timing of its use.

4

In it's most basic form, EMH implies that stock analysis and active investment strategies are at best pointless but, more probably, wasteful.

5

is a multi-factor model which proposes that different factors explicitly determine the stock's return vi a linear relationship.

6 Some of the factors commonly used in practice for equity portfolios are:

earnings

earnings

market

low price-to- ratio or price-to- values

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