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1.
All possible information about a security is reflected in its price when a market's efficiency is _______.
Strong. The stronger the efficiency, the more likely that a security's price will reflect current information.
2.
Index funds attempt to _______ the market.
Match. Index funds try only to match the market.
3.
The faster that information is incorporated into a security's price, _______.
The more efficient the market. Efficiency depends to a great deal on available information being expressed through a security's price.
4.
What findings threw the efficient market theory into question?
That stocks that are unpopular tend to outperform. Fama and French found that buying stocks that have performed poorly during the past few years led to superior returns over the next few years. In other words, a contrarian investment strategy can lead to better results than a strategy of buying popular stocks.
5.
Small-cap and large-cap stocks are examples of sub-asset categories.
True. They are sub-categories of stocks, and they are described by their capitalizations.
