Ennclent markets hypothesis True or False: The efficient markets hypothesis hold
ID: 2821474 • Letter: E
Question
Ennclent markets hypothesis True or False: The efficient markets hypothesis holds only if all investors are rational. False O True Almost all financial theory and decision models assume that the efficiency of financial markets determines the ability of investors to "beat the market and earn excess returns on their investments. If the markets are efficient, they wll react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency that reflect what information is incorporated in stock prices. financial markets are efficient. The informational or abnormal) Consider the following statement, and identify the form of capital market efficiency under the efficient market hypothesis based on this statement: Current market prices reflect all relevant information, whether it is known publicly or privately. This statement is consistent with: O Semistrong-form efficiency weak-form efficiency O Strong-form efficiency Consider that there is a weak-form of efficiency in the markets.
Explanation / Answer
1 The statement that efficient market hypothesis holds only if the investors are rational is true
2 The statement is consistent with strong form of efficiency
3 There will be some volatality in the stock price when earnigs report is released but it is difficult to determine the impact on the stock price, however the prices will eventually adjust to the news announceement.
4 An analyst who attempts to find undervalued securities by analyzing basic information such as accouting data business operations and future prospect performs a fundamental analysis.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.