Question

11.Which of the following statements about analysts’ earnings forecasts is correct? Analysts’ long-term forecasts tend to be too:

a)	high, whereas their near-term forecasts tend to be too low.

b)	high, and their near-term forecasts also tend to be too high.

c)	low, whereas their near-term forecasts tend to be too high.

d)	low, and their near-term forecasts also tend to be too low.

8.

Market timers attempt to earn abnormal returns by:

a)	adjusting the ratio of aggressive equity securities to defensive equity securities.

b)	shifting the mix of short-term securities to long-term securities.

c)	varying the percentage of portfolio assets in equity securities.

d)	adjusting the ratio of money market securities to capital market securities.

9.

Sector rotation:

a)	is a form of passive investing.

b)	is an active strategy similar to stock selection.

c)	varies the percentage of equities in the portfolio in order to earn abnormal returns.

d)	is not dependent on an accurate assessment of current economic conditions.

Answer 1

11.

An analyst can forecast short term return more accuretely than long term return. So, Analysts’ long-term forecasts tend to be too low, whereas their near-term forecasts tend to be too high.

Option (C) is correct answer.

8.

Market timer is defined as the tining for move in and out from market. Market timers attempt to earn abnormal returns by adjusting the ratio of money market securities to capital market securities.

Option (D) is correct answer.

9.

Sector rotation is an investment strategy in which investor move one sector to other sector according to rate of return on sectors. So, sector rotation is an active investment strategy.

Option (B) is correct answer.