围兜英文CHAPTER 13
llssCORPORATE FINANCING DECISIONS AND EFFICIENT CAPITAL MARKETS
Answers to Concepts Review and Critical Thinking Questions
1. To create value, firms should accept financing proposals with positive net prent values. Firms can create valuable financing opportunities in three ways: 1) Fool investors. A firm can issue a complex curity to receive more than the fair market value. Financial managers attempt to package curities to receive the greatest value. 2) Reduce costs or increa subsidies. A firm can package curities to reduce taxes. Such a curity will increa the value of the firm. In addition, financing techniques involve many costs, such as accountants, lawyers, and investment bankers. Packaging curities in a way to reduce the costs will also increa the value of the firm. 3) Create a new curity. A previously unsatisfied investor may pay extra for a specialized curity catering to his or her needs. Corporations gain from developing unique curities by issuing the curities at premium prices.
2. The three forms of the efficient markets hypothesis are: 1) Weak form. Market prices reflect information contained in historical prices. Investors are unable to earn abnormal returns using historical prices to predict future price movements. 2) Semi-strong form. In addition to historical data, market prices reflect all publicly-available information. Investors with insider, or private information, are able to earn abnormal returns. 3) Strong form. Market prices reflect all information, public or private. Investors are unable to earn abnormal returns using insider information or historical prices to predict future price movements.
3. a. Fal. Market efficiency implies that prices reflect all available information, but it does not imply certain knowledge. Many pieces of information that are available and reflected in prices are fairly uncertain. Efficiency of markets does not eliminate that uncertainty and therefore does not imply perfect forecasting ability.
b. True. Market efficiency exists when prices reflect all available information. To be efficient in the weak form, the market must incorporate all historical data into prices. Unde
r the mi-strong form of the hypothesis, the market incorporates all publicly-available information in addition to the historical data. In strong form efficient markets, prices reflect all publicly and privately available information.
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c. Fal. Market efficiency implies that market participants are rational. Rational people will immediately act upon new information and will bid prices up or down to reflect that information.
d. Fal. In efficient markets, prices reflect all available information. Thus, prices will fluctuate whenever new information becomes available.
南泰贤 e.brahma True. Competition among investors results in the rapid transmission of new market information. In efficient markets, prices immediately reflect new information as investors bid the stock price up or down.
4. On average, the only return that is earned is the required return—investors buy ast
s with returns in excess of the required return (positive NPV), bidding up the price and thus causing the return to fall to the required return (zero NPV); investors ll asts with returns less than the required return (negative NPV), driving the price lower and thus causing the return to ri to the required return (zero NPV).
四级听力答案5. The market is not weak form efficient.
6. Yes, historical information is also public information; weak form efficiency is a subt of mi-strong form efficiency.
7. Ignoring trading costs, on average, such investors merely earn what the market offers; the trades all have zero NPV. If trading costs exist, then the investors lo by the amount of the costs.
8. Unlike gambling, the stock market is a positive sum game; everybody can win. Also, speculators provide liquidity to markets and thus help to promote efficiency.
mg什么意思9.sppc The EMH only says, within the bounds of increasingly strong assumptions about the i
nformation processing of investors, that asts are fairly priced. An implication of this is that, on average, the typical market participant cannot earn excessive profits from a particular trading strategy. However, that does not mean that a few particular investors cannot outperform the market over a particular investment horizon. Certain investors who do well for a period of time get a lot of attention from the financial press, but the scores of investors who do not do well over the same period of time generally get considerably less attention from the financial press.
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10.xsysinfo a. If the market is not weak form efficient, then this information could be acted on and a profit earned from following the price trend. Under (2), (3), and (4), this information is fully impounded in the current price and no abnormal profit opportunity exists.
