#INVESTMENTS BODIE KANE MARCUS PDF FULL#

While some securities will turn out after any investment period to have provided positive alphas (i.e., risk-adjusted abnormal returns) and some negative alphas, these past returns are not predictive of future returns.5. In an efficient market, no securities are consistently overpriced or underpriced.

11-4Ĭhapter 11 - The Efficient Market Hypothesis4.

If low P/E stocks tend to have positive abnormal returns, this would represent an unexploited profit opportunity that would provide evidence that investors are not using all available information to make profitable investments.

#INVESTMENTS BODIE KANE MARCUS PDF FULL#

The full price adjustment should occur just as the news about the dividend becomes publicly available.3. Semi-strong form efficiency implies that market prices reflect all publicly available information concerning past trading history as well as fundamental aspects of the firm.2. The analysis is symmetric for insider sales.CFA PROBLEMS1. The positive abnormal returns after purchase suggest insider purchases in anticipation of good news. This is evidence of valuable inside information. The negative abnormal returns (downward drift in CAR) just prior to stock purchases suggest that insiders deferred their purchases until after bad news was released to the public. Compared to prior expectations, the announcement was a disappointment.23. The market may have anticipated even greater earnings. E] This estimate of firm-specific news would measure the market’s assessment of the potential profitability of Ford’s new model.22.

Investments bodie kane marcus pdf