1. Three years after Lokicorp went public, it was discovered that the company was deliberately...
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Accounting
1. Three years after Lokicorp went public, it was discovered that the company was deliberately altering its nancial reports. As a result of this nding, the price of Lokicorps stock fell by 75% within less than an hour. Which forms of the ecient market hypothesis are consistent with these events?
(a) No form of the EMH is consistent with these results.
(b) Weak-form EMH.
(c) Weak-form and Semistrong-form EMH.
(d) Weak-form, Semistrong-form, and Strong-form EMH.
2. Which of the following is not a reason to be skeptical about the announcement of an ecient market anomaly
(a) Investors may recognize that the anomalous statistic is reective of risk not otherwise accounted for by simple theories
(b) Some investors may have already known about the anomaly but kept quiet so that they could make prots
(c) Behaviorally biased investors may trade based on announced anomalies in the future, even if they were originally incorrectly identied
(d) Analyzing a large number of statistics is likely to produce one that appears incorrectly to predict returns just by chance
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