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Principles of Finance Study Set 1
Quiz 17: Security Valuation and Selection
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Question 81
True/False
Technical analysts probably would agree that fundamental analysts can find the intrinsic value of a firm, but, by the time fundamentalists finish their analysis, it is too late to take advantage of the result.
Question 82
True/False
If an investor wishes to better diversify her investment portfolio, which consists of the common stocks of many of the firms that are in the Dow Jones Industrial Average, she probably should invest in some companies that are in those industries that are classified as cyclical.
Question 83
True/False
If security markets were truly strong-form efficient, then there would be no need for investors to evaluate the value of stocks because they could never earn abnormal returns.
Question 84
True/False
A mispriced stock exists when the market value and intrinsic value are not the same.
Question 85
True/False
Technical analysts essentially believe "history repeats itself" because investors behave in a predictable manner when faced with situations they have faced in the past.
Question 86
True/False
Using the dividend discount model (DDM) to value common stock is relatively easy because it entails simply computing the present value of the future cash flows, or dividends, generated by the firm.
Question 87
True/False
The value of any asset can be described as the present value of the cash expected to be generated by the asset during its life.
Question 88
True/False
If the financial markets are strong-form efficient, then stock analysis would be a waste of time because investors would not be able to earn abnormal returns, no matter how well the valuation models they use perform.