Analysis of Past Monthly Movements in IBM's Stock Price Produces

question 52

Multiple Choice

Analysis of past monthly movements in IBM's stock price produces the following estimates: α = 2.5% and β = 1.6.If the market index subsequently rises by 12% in one month and IBM's stock price increases by 20%,what is the abnormal change in IBM's stock price?

• A)+1.7%
• B)+8.0%
• C)-1.7%
• D)+2.5%

Evaluate the effectiveness of the VALS framework in the context of consumer behavior and marketing strategies.

Understand the concept of market efficiency and its empirical challenges.

Recognize empirical evidence against the Law of One Price in various financial instruments and market anomalies.

Comprehend behavioral finance theories, including Kahneman and Tversky’s findings regarding decision-making biases.

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Definitions:

Cheerfulness

The quality or state of being noticeably happy and optimistic.

Stanley Milgram

A psychologist known for his groundbreaking research on obedience to authority, including the famous Milgram experiment.

Inhumane Acts

Actions or treatments that are cruel, lacking kindness and compassion, often causing physical or psychological harm.

Stanley Milgram

A psychologist known for his research on obedience, demonstrating how people are willing to follow orders from an authority figure, even to the extent of causing harm to others.