A. during periods of extreme pessimism because so many stocks become undervalued
B. only when people are irrational
C. when stocks are fairly valued
D. because rational people may buy an overvalued share if they think they can sell it to someone for even more at a later date
Related Mcqs:
- Compared to a portfolio composed entirely of shares a portfolio that is 50 percent government bonds and 50 percent shares will have a ?
A. lower return and a lower level or risk
B. lower return and a higher level of risk
C. higher return and a lower level or risk
D. higher return and a higher level of risk - The speculative demand for money occurs when ?
A. Individuals hold money just in case an emergency happens
B. Individuals hold money to buy things
C. Individuals hold money rather than other assets because they are worried about the price of the other assets falling
D. Individuals hold money to shop - How is known the process in which an investment company continually offers new shares and buys existing shares back on demand and uses its capital to invest in diversified securities of other companies ?
A. combine fund
B. Mutual fund
C. Liquid fund
D. Stock holding company - one of the tenets of the classical view of the labor market is that the wage adjustments that are necessary to clear the labor market occur ?
A. quickly
B. slowly
C. very infrequently
D. instantly - What is called when a private company first offers shares to the public market and investors ?
A. Public offering
B. Public floating
C. going public
D. Coming public - In the context of equities What is called a firm with two divisions that may split into two companies and issue original shareholders two shares for every old share they have ?
A. Spreadsheet
B. Splinter
C. Family growth
D. Butterfly - There is a decentralized market where geographically dispersed dealers are linked by telephones and computer screens. The market is for securities not listed on a stock or bond exchange. Name the market ?
A. Grey market
B. Over-the counter (OTC)
C. Open market
D. Back market - If a producer has market power (can influence the price of the product in the market) then free market solutions ?
A. are equitable.
B. are efficient
C. maximize consumer surplus
D. are inefficient - If all firms in a market have identical cost structures and if inputs used in the production of the good in that market are readily available, then the long-run market supply curve for that good should be ?
A. downward sloping
B. perfectly inelastic
C. upward sloping
D. perfectly elastic - Open Market Operations occur when the government ?
A. Reduces the interest rate
B. Buys and sells bonds and securities
C. Increases taxation
D. Increase the exchange rate
