A. Directions: Determine whether the statement is TRUE or FALSE.
Statement
1. The Theory of Efficient Markets tells investors to invest in a
variety of securities and "never put all their eggs in one
basket".
2. When investors spread their wealth in various efficiency
forms, he is likely to maximize the risk of losing.
3. The weak form of the market efficiency covers all public
information only but not the private ones.
4. The best form of market efficiency is the strong form
because it covers the information obtained from the weak
form and semi-strong form.
5. The Theory of Efficient Market forecasts the market,
discover the market trend and help investors make critical
decisions.
6. Anyone can beat the market as stated in the Theory of
Efficient Market.
7. One strategy to perform well in the stock market is to
determine the value of the stock. Undervalued stocks are
bought today and sold in the future, while overvalued
stocks are sold immediately at a higher price.
8. One can trust the market prices because they give an
accurate measure of all available information about the
stock.
9. It is always possible to outperform the overall market
through expert stock selection and market timing, and the
only way an investor can possibly obtain higher returns is
by purchasing riskier events.
10. The stock market has already been beaten by investor
Warren Buffett over long periods of time because of his
expertise and research about the stock market.
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