“The market is weak form efficient if it is semi-strong form efficient”. Introduction: Efficient market refers to the market where the share prices of companies reflect the existing information. Semi-strong form efficient market exists if the stock prices reflect the public information in the form of financial statements. This type is controversial because it suggests that finding the best stock investment based on financial information is useless. It is because the stock price in the market already reflects the impact of financial information. A weak form efficient market exists if the stock prices at present reflect the trend in the stock’s historical prices. This market suggests that finding the best stock investment based on historical information is useless because the stock price in the market already reflects the information.

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Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 10, Problem 6CTCR

Summary Introduction

To discuss: “The market is weak form efficient if it is semi-strong form efficient”.

Introduction:

Efficient market refers to the market where the share prices of companies reflect the existing information.

Semi-strong form efficient market exists if the stock prices reflect the public information in the form of financial statements. This type is controversial because it suggests that finding the best stock investment based on financial information is useless. It is because the stock price in the market already reflects the impact of financial information.

A weak form efficient market exists if the stock prices at present reflect the trend in the stock’s historical prices. This market suggests that finding the best stock investment based on historical information is useless because the stock price in the market already reflects the information.

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Students have asked these similar questions

What is semi-strong-form EMH? What would you expect to see/not see if markets where semi-strong form efficient? In other words, can you think of market events that would serve as evidence that market is or isn’t semi-strong-form efficient?

Which of the following statements is/are correct? Group of answer choices If a market is weak form efficient it is also semi- and strong form efficient If a market is strong form efficient it is also semi- and weak form efficient If a market is semi-strong efficient it is also strong form efficient If a market is strong form efficient it is also semi-strong but not weak form efficient

What is weak-form EMH? What would you expect to see/not see if markets where weak form efficient? In other words, can you think of market events that would serve as evidence that market is or isn’t weak-form efficient?

Answer 2

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Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 10, Problem 6CTCR

Summary Introduction

To discuss: “The market is weak form efficient if it is semi-strong form efficient”.

Introduction:

Efficient market refers to the market where the share prices of companies reflect the existing information.

Semi-strong form efficient market exists if the stock prices reflect the public information in the form of financial statements. This type is controversial because it suggests that finding the best stock investment based on financial information is useless. It is because the stock price in the market already reflects the impact of financial information.

A weak form efficient market exists if the stock prices at present reflect the trend in the stock’s historical prices. This market suggests that finding the best stock investment based on historical information is useless because the stock price in the market already reflects the information.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 10, Problem 6CTCR

Summary Introduction

To discuss: “The market is weak form efficient if it is semi-strong form efficient”.

Introduction:

Efficient market refers to the market where the share prices of companies reflect the existing information.

Semi-strong form efficient market exists if the stock prices reflect the public information in the form of financial statements. This type is controversial because it suggests that finding the best stock investment based on financial information is useless. It is because the stock price in the market already reflects the impact of financial information.

A weak form efficient market exists if the stock prices at present reflect the trend in the stock’s historical prices. This market suggests that finding the best stock investment based on historical information is useless because the stock price in the market already reflects the information.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 10, Problem 6CTCR

Summary Introduction