Is a strong-form efficient market also semistrong-and weak-form efficient?
A. If a market is strong-form efficient, it is also semistrong- but not weak-form efficient. B. If a market is strong-form efficient, it is also semistrong- and weak-form efficient.
Do stock prices reflect all information about the market?
B. money market C. stock D. hedge A You believe that stock prices reflect all information that can be derived by examining market trading data such as the history of past stock prices, trading volume, or short interest, but you do not believe stock prices reflect all publicly available and inside information.
Do stock prices rapidly adjust to new information?
A. Stock prices do not rapidly adjust to new information B. Future changes in stock prices cannot be predicted from any information that is publicly available C. Corporate insiders should have no better investment performance than other investors even if allowed to trade freely
What are the four types of firm effects in economics?
I. The small-firm effect II The book-to-market effect III The neglected-firm effect IV. The P/E effect A. I and III only B. I, II, and III only
What contradicts the efficient market hypothesis?
The market rewards investors with an appetite for risk and, on average, we expect that higher risk strategies give more revenue. What would contradict the efficient market hypothesis is the existence of investment strategy, from which income is higher than the corresponding risk compensation.
What is a weakly efficient market?
Weak form efficiency states that past prices, historical values, and trends can't predict future prices. Weak form efficiency is an element of efficient market hypothesis. Weak form efficiency states that stock prices reflect all current information.
What is a weak form inefficient market?
Weak form efficiency refers to a market where share prices fully and fairly reflect all past information. In such a market, it is not possible to make abnormal gains by studying past share price movements.
What causes a market to be weak form efficient?
Weak Form. The three versions of the efficient market hypothesis are varying degrees of the same basic theory. The weak form suggests that today's stock prices reflect all the data of past prices and that no form of technical analysis can be effectively utilized to aid investors in making trading decisions.
How do you determine weak form efficiency?
Weak form of EMH is tested using the Kolmogorov-Smirnov goodness of fit test, run test and autocorrelation test. The K-S test result concludes that in general the stock price movement does not follow random walk. The results of the runs test reveals that share prices of seven companies do not follow random walk.
What is weak form efficiency and what are its implications?
Definition: Weak form efficiency, also known as the random walk theory, holds that the historical data of a stock do not affect its price. Therefore, projecting the future values is not improved by knowing the historical values.
What are weak forms?
Weak forms are syllable sounds that become unstressed in connected speech and are often then pronounced as a schwa. In the sentence below the first 'do' is a weak form and the second is stressed.
Which of the following statements is a defining characteristic of the weak form efficient market hypothesis?
Which of the following statements is a defining characteristic of the weak-form efficient market hypothesis? The prior pricing of a stock will have no effect on future returns.
What is an efficient stock market?
Market efficiency refers to the degree to which market prices reflect all available, relevant information. If markets are efficient, then all information is already incorporated into prices, and so there is no way to "beat" the market because there are no undervalued or overvalued securities available.
What is weak form market?
Weak-form of market efficiency postulates that past market date is fully reflected in the current market prices such that no rule derived from study of historical trends can be used to earn excess return. Weak-form of market efficiency is the weakest form of efficient market hypothesis (EMH).
Which of the following market anomalies is inconsistent with weak form market efficiency?
Which of the following market anomalies is inconsistent with weak-form market efficiency? Momentum pattern. Researchers have found that value stocks have consistently outperformed growth stocks.
How the weak form efficient market hypothesis EMH is tested?
Weak form of EMH is tested using the Kolmogorov-Smirnov goodness of fit test, run test and autocorrelation test. The K-S test result concludes that in general the stock price movement does not follow random walk. The results of the runs test reveals that share prices of seven companies do not follow random walk.