According to the random walk hypothesis, the best prediction of ...

[saraeharris]

According to the random walk hypothesis, the best prediction of tomorrow's stock price is:
 
  A) Current earnings per share.
  B) Today's stock price.
  C) P/E ratios of other firms in the industry.
  D) The most recent dividend.
  E) Predictions by the best informed analysts.

Question 2

The Explosive Bull Plus Fund seeks daily investment results that correspond to two times (200) the daily performance of the S&P 500 Index. The expected return on the S&P index is 6, and the expected return on T-Bills (the risk-free rate) is 2.
 
  If you wanted to build a portfolio out of T-Bills and the S&P index to mimic the performance of the Fund, then what are the portfolio weights of each asset?
  A) wS&P = 1 and wT-Bill = 0
  B) wS&P = 1.5 and wT-Bill = -0.5
  C) wS&P = 1.8 and wT-Bill = -0.8
  D) wS&P = 2.5 and wT-Bill = -1.5
  E) wS&P = 2.67 and wT-Bill = -1.67

[cam1229]

Answer to Question 1

B

Answer to Question 2

D