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4. Please answer the question. 1) The semi-strong form of the efficient market hypothesis states that future changes in stock prices cannot be (20points) a. True b. False predicted from any information that is publicly available 2) If you have consistently made superior returns by buying stock after a 10% rise in price and selling after a 10% fall, this would appear to contradict the weak form of the efficient market hypothesis. (20points) a. True b. False Conventional finance theory assumes investors are rational, and behavioral finance assumes investors also are rational. (20points) a. True b. False 3) 4) Behavioral finance points out that even if market prices are distorted, there may be limitless arbitrage opportunities. (20points) a. True b. False 5) We have a zero-coupon bond with 3 years to maturity, a par value of $1,000, and the yield to maturity of 12%. The duration of this bond is shorter than 3years. (1Spoints) a. True b. False 6) Bonds sold in Japanese markets and issued in dollar are called Samuari bond. (15points) a. True b. False 7) A call option on Dr. Pepper Snapple Group, Inc., has an exercise price of $42. The current stock price is S41. The call option is out of the money. (15points) a. True b. False 8) All else the same, a European option will be less valuable than an American option. (15points) a. True b. False

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