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QUIZ: Efficient Market Hypothesis (EMH)
14 Questions (One Correct Answer per Question)
Efficient Market Hypothesis (EMH)
Q1: Which of the following is a key assumption of the Efficient Market Hypothesis (EMH)?
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Q2: In the Variance Ratio (VR) test, what does a VR value significantly different from one suggest?
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Q3: In the Wald-Wolfowitz Runs (WWR) test, what does a test statistic far from zero suggest?
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Q4: The Efficient Market Hypothesis (EMH) assumes that:
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Q5: Which of the following best describes the concept of "Homo Economicus" in financial theory?
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Q6: Which of the following is a challenge to the Efficient Market Hypothesis (EMH)?
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Q7: Which of the following statements contradicts the assumptions of the Efficient Market Hypothesis (EMH)?
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Q8: According to behavioral finance, what is a primary reason why markets may become inefficient?
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Q9: How does herding behavior contribute to market inefficiency?
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Q10: According to Professor Fischer Black, market prices may fluctuate significantly around their fundamental value due to uncertainty, noise, and inefficiencies. Given this fluctuation, the market price is considered "correct" within what factor of the fundamental value?
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Q11: According to Professor Andrew Lo, under what conditions can financial markets appear efficient?
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Q12: According to the Adaptive Markets Hypothesis (AMH) by Professor Andrew Lo, which of the following is true regarding the Efficient Market Hypothesis (EMH)?
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Q13: The Efficient Market Hypothesis (EMH) suggests that markets quickly incorporate all publicly available information, ensuring that no investor consistently gains an edge. However in the book "A Man for All Markets", Professor Edward Thorp challenges this view by stating: "Be aware that information flows down a 'food chain', with those who get it first 'eating' and those who get it late 'being eaten'". What does Thorp's statement imply about financial markets?
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Q14: According to the Adaptive Markets Hypothesis (AMH) by Professor Andrew Lo, why are traditional quantitative finance models sometimes insufficient for real-world investing?
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