UMUC FIN 610 Week 10 Quiz with Answers
UMUC FIN 610 Week 10 Quiz with Answers
BUY HERE⬊
1. Semistrong form efficiency implies:
2. Which of the following is NOT an empirical challenge to market efficiency?
3. Which of the following should not lead to an increase in market efficiency?
4. An exchange rate regime is one under which rates of exchange are determined in the market on the basis of predominantly private transactions is called:
5. Assuming a market in which transaction costs are negligible, if the Covered Interest Rate Parity (CIRP) is violated then traders should be able to:
6. This question is a continuation of the "Contagious Speculation and a Cure for Cancer: A Nonevent that Made Stock Prices Soar" from your Practice Problems for this session. So read that first if you do not remember, and then continue.
After the NYT publication on Sunday, May 3, 1998, the EntreMed stock price rose from $ 12.063 at the market close on May 1, 1998 to $85 at the market opening on May 4, 1998.
Question: According to one form of Market Efficiency, the stock price should not have reacted to the May 3, 1998 publication, because it did not contain any new information.
7. What form of violation of market efficiency is the following?
Research demonstrates that portfolio of stocks of companies announcing stock repurchase program over-perform portfolio of other stocks over four year period after the announcement.
Hint: Note that a violation of the Strong form of market efficiency is also a violation of the Semi-strong form and Weak form. Similarly a violation of the Semi-strong form is also a violation of the Weak form.
So when a question is asked, "what form of market efficiency is violated?" if Strong form is violated, you should reply "Strong form" even though it implies that "Semi-strong" form and "Weak form" are also violated. Similarly if "Strong form" is not violated, but "Semi-strong" form and "Weak-form are violated" then you should reply "Semi-strong". Only if only "Weak-form" is violated, then should you reply "Weak-form".
8. Three Exchange Rates are as follows:
1) US Dollars (USD) to Japanese Yens (JYP) at JPY 95 to USD 1
2) JPY to Euros (EUR) at JPY 128 to EUR 1
3) EUR to USD at EUR 0.72 to USD 1
Suppose you start with USD 100,000, and do one round of "triangular arbitrage", that is convert make a total of 3 foreign exchange transactions to start from USD and return to USD. What will be your profit in USD?
9. Three Exchange Rates are as follows:
1) US Dollars (USD) to Canadian Dollars (CAD) at CAD 1 to USD 1.05
2) CAD to Euros (EUR) at CAD 1.40 to EUR 1
3) EUR to USD at EUR 0.72 to USD 1
Suppose you start with USD 100,000, and do one round of "triangular arbitrage", that is convert make a total of 3 foreign exchange transactions to start from USD and return to USD. What will be your profit in USD?
10. The Spot Rate (S0) for USD to Australian Dollars (AUD) is USD 0.90 to AUD 1.
The riskless rate of interest in the US for 3 months (RUS) is 0.2%. The riskness rate in Australia (Foreign Country) is 1.4%.
According to the Covered Interest Rate Parity relationship, what should be the 3-month Forward rate (F) of USD to AUD? (Note: Your answer should be the number of USD for AUD 1 in the 3-month Forward rate for USD to AUD.)
Comments
Post a Comment