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1) If you believe in the reversal effect, you should buy stocks that performed well last period. (10points) a. True. b. False

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Answer:

False.

Step-by-step explanation:

The reversal effect is a theory in the field of business and investment that establishes that markets move in an oscillating way, that is, with constant ups and downs, which occur in reverse: if a share rises in a day set of days, the most logical and expected thing is that it comes down proportionally.

Thus, according to this theory, the performance of a market instrument is determined by its ability to maintain value at times of decline.

User Chris Daniel
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