If the financial markets were not efficient, O a. prices indicate the proper val

Question

If the financial markets were not efficient, O a. prices indicate the proper valuation of securities Ob. all investors would profit c. prices would adjust rapidly d. an investor may consistently outperform the market QUESTION 9 The risk-adjusted required rate of return includes 1. the firm's earnings 2. the firm's beta coefficient 3. the treasur bill rate (i.e., the risk-free rate) a. 1 and2 Ob. 1 and 3 Oc. 2 and 3 Od. all of the above QUESTION 10 An investment's internal rate of return equates O a. dividend payments and the investment's cost Ob. cash outflows and subsequent cash inflows c. initial cash outflow and the sale price Od. dividend payments and capital gains

Explanation / Answer

8) If the markets were not efficient an investor may consistently outperform the market (option d)

9) The risk adjusted required rate of return includes the beta coefficient and the treasury bill rate (Risk free rate) (Option c)

10) IRR equates present value of cash outflows with the present value of cash inflows (option b)

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