1. If you believe in the efficient market hypothesis, you should also believe that ____

--investors may be better off investing in an actively managed fund instead of a passively managed fund such as the S&P 500.

--technical analysis is helpful in picking stocks.

--All of the choices here are correct.

--it is very difficult for anyone to constantly pick stocks that will “beat the market”.

--investors can predict future stock prices by looking at stock prices in the past.

2. Which statement is NOT true?

A. If two firms have the exact same ROA (return on assets), the one with the higher debt ratio will have the higher ROE (return on equity).

B. If a firm has a lower DSO (days sales outstanding), it manages receivables more efficiently than one with a higher DSO.

C. High inventory turnover shows better inventory management than low inventory turnover.

D. The higher the current ratio, the less liquid the firm is assumed to be.