1) The efficient market hypothesis requires

MULTIPLE CHOICE

1) The efficient market hypothesis requires

2) If financial markets are efficient, that suggests that

3) Which of the following is included in an individual’s cash budget?

4) The tendency for securities prices to overreact may create an anomaly that can lead to superior returns.
a. True
b. False

5) Contributions to a Roth IRA are not tax-deductible.
a. True
b. False

6) Pension plans permit investors to defer income tax.
a. True
b. False

7) With a Roth IRA, the individual

8) Possible investment objectives may include

9) The amount of an outstanding mortgage appears on the individual’s balance sheet.
a. True
b. False

10) One anomaly to the efficient market hypothesis is that investments in debt of large firms will earn higher returns than investments in their stock.
a. True
b. False

11) The process of financial planning requires the individual to

12) Examples of tax shelters for individuals include

13) Short-term capital gains are subject to higher tax rates than long-term capital gains.
a. True
b. False

14) Which of the following currently reduces taxes?

15) Net short-term capital losses are used to offset

16) An active portfolio strategy is premised on

17) The traditional IRA is

18) Contributions to an IRA appear on the individual’s estimate of cash receipts and disbursements.
a. True
b. False

19) One of the first steps an investor should take is to establish the goals of the portfolio.
a. True
b. False

20) An implication of the efficient market hypothesis is

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