Question

Which of the following is true about the market? -If you can beat the market with...

Which of the following is true about the market?

-If you can beat the market with fundamental analysis then the market is strong form efficient  

-If the market is strong form efficient then the market is also semi-strong form efficient

-If you can beat the market using technical analysis then the market is semi-strong form efficient

-If the market is weak form efficient then the market is also semi-strong form efficient

Which of the following is true if the market is efficient?

-Stock prices will underreact to new information; but, adjust to a new equilibrium within 3 business days

-Stock prices should react quickly and accurately to new information

-Stock prices will overreact to new information and adjust to a new equilibrium within 7 days

-Stock prices should adjust slowly to new information

Homework Answers

Answer #1

Correct option:
-If the market is strong form efficient then the market is also semi-strong form efficient

If you can beat the market with fundamental analysis then it is semi strong form efficient.
If you can beat the market using technical analysis then the market is weak form efficient
-If the market is weak form efficient then the market it cannot be semi-strong form efficient

Correct option:
-Stock prices should react quickly and accurately to new information

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