The payback period ignores the time value of money and therefore should not be used as a
screening device for the selection of capital budgeting projects.
Indicate whether the statement is true or false
FALSE
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The strong form of the efficient market hypothesis contends that
A) a select few institutional investors can earn abnormal profits. B) abnormal profits are randomly distributed. C) no one can consistently earn a profit. D) no one can consistently earn abnormal profits.
Which of the following causes a volatility smile that is a ``frown``?
A. There is a small probability of a large stock price decrease in one week B. There is a small probability of a large stock price increase in one week C. The outcome of a lawsuit (roughly equal chance of being favorable or unfavorable) will create a large movement up or down in one week D. None of the above