Chapter 7: Q.21 (page 210)
What are the implications of behavioral finance?
According to behavioral finance, when stock prices rise, investors are less likely to engage in short sells, resulting in missed profit chances.
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Would independent trucking fit the characteristics of a perfectly competitive industry?
What basic principle of finance can be applied to the valuation of any investment asset?
Suppose that you decide to play a game. You buy stock by throwing a dice a few times, using that method to select which stock to buy. After ten months you calculate the return on your investment and the return earned by someone who followed “expert” advice during the same period. If both returns are similar, would this constitute evidence in favor of or against the efficient market hypothesis?
If monetary policy becomes more transparent about the future course of interest rates, how will stock prices be affected, if at all?
If higher money growth is associated with higher future inflation, and if announced money growth turns out to be extremely high but is still less than the market expected, what do you think will happen to long-term bond prices?
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