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Advanced Wealth Management Course (IIBF) - Paper 3

Part III: Ch 2: Introduction to Efficient Market Hypothesis

Q1.

Which Market Hypothesis is popularly known as the Random Walk Theory?

Weak-Form Efficient Market Hypothesis

Semi-Strong-Form Efficient Market Hypothesis

Strong-Form Efficient Market Hypothesis

None of the above

Q2.

(I) Capital Market efficiency is more restrictive than the concept for perfect capital markets. (II) In Weak-Form Efficient Market Hypothesis, it is assumed that all publicly available information about an asset is already reflected in its price.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q3.

In the Strong-From Efficient Market Hypothesis, all information, either public or private, is already reflected in the stock prices.

True

False

Q4.

(I) Technical analysts determine the intrinsic value of a company at a point in time by studying the economic variables such as future earnings, interest rates and risk factors. (II) The Strong-Form Efficient Market Hypothesis encompasses both the Weak-Form Efficient Market Hypothesis and Semi-Form Efficient Market Hypothesis.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q5.

The efficient market hypothesis is inconsistent with Fundamental Analysis.

True

False

Q6.

In an efficient capital market asset prices adjust rapidly to the arrival of new information and current market price of an asset reflects all available information about that asset.

True

False

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