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1.
Index funds attempt to _______ the market.
Match. Index funds try only to match the market.
2.
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.
3.
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.
4.
In an efficient market, investors are actually trading information.
True. Since prices reflect information, in an efficient market, investors are actually trading information.
5.
In an efficient market, only new information about a security can change its price.
True. According to the theory, prices react to new information.
