FIN 402 Expect Success/uophelp.com FIN 402 Expect Success/uophelp.com | Page 24

2. When the market risk premium rises, stock prices will ________.
3. Proponents of the EMH typically advocate __________.
4. Choosing stocks by searching for predictable patterns in stock prices is
called
5. In a recent study, Fama and French found that the return on the
aggregate stock market was __________ when the dividend yield was
higher.
6. Even if the markets are efficient, professional portfolio management is
still important because it provides investors with
7. Suppose that in 2006 the expected dividends of the stocks in a broad
market index equaled $210 million when the discount rate was 9.5% and
the expected growth rate of the dividends equaled 6.5%. Using the
constant growth formula for valuation, if interest rates increase to 10.5%
the value of the market will change by ______.
8. Conventional finance theory assumes investors are _______ and
behavioral finance assumes investors are _______
9. If investors are too slow to update their beliefs about a stock's future
performance when new evidence arises they are exhibiting _______ and if
they overweight recent performance in forecasting the future they are
exhibiting _______.
10. Trading activity and average returns in brokerage accounts tends to be
11. Your two best friends each tell you about a person they know who
successively started a small business. That's it, you decide, if they can do it
so can you. This is an example of _____________.
12. An investor holds a very conservative portfolio invested for retirement
but she takes some extra cash she earned from her year end bonus and
buys gold futures. She appears to be engaging in ___________.