As John Walked Outside the Ballpark, a Foul Ball Sailed

question 15

Multiple Choice

As John walked outside the ballpark, a foul ball sailed over the fence and came straight at him. He saw it, and before he could think of what to do, he had reflexively jumped out of the way. What part of the brain saved John from a nasty bump?

• A) hypothalamus
• B) pons
• C) medulla oblongata
• D) midbrain

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Definitions:

Four-factor Model

A financial model that expands the three-factor model (market risk, size risk, and value risk) by adding a momentum factor to explain stock returns.

Fama and French Factors

Fama and French factors are three factors—market risk, size risk, and value risk—used in explaining portfolio returns beyond the market risk measured by beta.

Semistrong-form

A theory suggesting that stock prices incorporate all publicly available information, including historical data and public news.

Efficient Market Hypothesis

A theory stating that share prices reflect all available information, making it impossible to consistently achieve higher returns.