If it proves possible to make abnormal profits based on information regarding past stock prices, then the market is: semi strong-form efficient. strong-form efficient. weak-form efficient. not weak-form efficient.

If it proves possible to make abnormal profits based on information regarding past stock prices, then the market is: semi strong-form efficient. strong-form efficient. weak-form efficient. not weak-form efficient.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 12QTD

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

If it proves possible to make abnormal profits based on information regarding past stock prices, then the market is:
semi strong-form efficient.
strong-form efficient.
weak-form efficient.
not weak-form efficient.

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Given the following anomalies, which is inconsistent with weak-form market efficiency? Day-of-the-week effect. Value effect. Earnings surprise. Stock split effect. All of the above answers are inconsistent with weak-form market efficiency. None of the above answers is consistent with weak-form market efficiency.
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