TURE OR FALSE

1. Adaptive expectations models rely on expectations of future events being formed solely on the basis of past experience

2. In developing and transition economies the application of tools to effectively counter the problem of asymmetric information is rarely a problem because most of the financial institutions are international in scope.

3. Transaction costs are of only minor consequence in most financial arrangements.

4. For Canadian non-financial corporations, the most important source of funds is:

1. Bonds 2. Stocks 3. Bank loans 4. Non-bank loans

5. Bonds are a more important source of funds for US corporations than they are for Canadian firms.

6. empirical evidence confirms that recommendations from investment advisers cannot help us outperform the general market

7. The efficient market hypothesis argues that in an efficient market, a security’s price fully reflects all available information

8. The price to future earnings is a better guide to a stock's value than the current P/E ratio because it accurately recognizes the stream of revenue the firm will receive over the coming period.

9. Because markets reflect all information under the efficient markets hypothesis major financial institutions hardly ever seriously miscalculate the value of financial instruments