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The small-firm effect refers to the ____.
A) negative returns earned by small firms
B) returns equal to large firms earned by small firms
C) abnormally high returns earned by small firms
D) low returns after adjusting for risk earned by small firms
Answer: C
Diff: 1 Type: MC Page Ref: 7A.1- 4
Topic: Questions for Web Appendix on the Efficient Market Hypothesis
Skill: Recall
Objective List: Appendix: Evidence on the Efficient Market Hypothesis
The January effect refers to the fact that ____.
A) most stock market crashes have occurred in January
B) stock prices tend to fall in January
C) stock prices have historically experienced abnormal price increases in January
D) the football team winning the Super Bowl accurately predicts the behavior of the stock
market for the next year
Answer: C
Diff: 1 Type: MC Page Ref: 7A.1- 4
Topic: Questions for Web Appendix on the Efficient Market Hypothesis
Skill: Recall
Objective List: Appendix: Evidence on the Efficient Market Hypothesis
When a corporation announces a major decline in earnings, the stock price may initially
decline significantly and then rise back to normal levels over the next few weeks. This impact is
called ____.
A) the January effect
B) mean reversion
C) market overreaction
D) the small-firm effect
Answer: C
Diff: 1 Type: MC Page Ref: 7A.1- 5
Topic: Questions for Web Appendix on the Efficient Market Hypothesis
Skill: Recall
Objective List: Appendix: Evidence on the Efficient Market Hypothesis
A phenomenon closely related to market overreaction is ____.
A) the random walk
B) the small-firm effect
C) the January effect
D) excessive volatility
Answer: D
Diff: 1 Type: MC Page Ref: 7A.1- 5
Topic: Questions for Web Appendix on the Efficient Market Hypothesis
Skill: Recall
Objective List: Appendix: Evidence on the Efficient Market Hypothesis