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- Undergraduate Degree
QUIZ (17.10.2016)
Name: ……………………………………………………………………………………………. Number: ………………………..
Answer each question by drawing a circle around the letter that, in your opinion,
corresponds to the correct solution.
1-If capital markets are efficient, then the sale or purchase of any security at the prevailing
market price is generally:
a) A positive-NPV transaction.
b) A zero-NPV transaction.
c) A negative-NPV transaction.
d) No general trend exists for such transactions.
a) I only
b) II only
c) II and III only
d) III only
3- Strong-form market efficiency states that the market incorporates all information into stock
prices. Strong-form efficiency implies that:
I) An investor can only earn risk-free rates of return;
II) An investor can always rely on technical analysis;
III) An insider or corporate officer cannot outperform the market by trading on the
inside information
a) I only
b) II only
c) III only
d) I, II and III
a GESTÃO FINANCEIRA II Lic. - Undergraduate Degree
5- Company X has 100 shares outstanding. It earns $1,000 per year and expects to pay all of it
as dividends. If the firm expects to maintain this dividend forever, calculate the stock price
after the dividend payment. (The required rate of return is 12%.)
a) $88
b) $112
c) $83.3
d) $12
6- The rightist position is that the market will reward firms for having:
a) A high dividend yield.
b) A low dividend yield.
c) Good management, regardless of dividend yield.
d) A zero payout policy.