Question

Why is it not practical to have a strong style efficiency of markets in the USA?...

Why is it not practical to have a strong style efficiency of markets in the USA? What information does that entail?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Strong form market efficiency means that all the information either public or private is completely reflected in the stock price. Investors cannot earn extra returns even through insider trading. No one can earn excess returns in this form of market. So, it is not practical for USA to have a strong form of market efficiency. So, it is not practical for USA to have a strong form of market efficiency.

In semi strong market efficiency, investors cannot earn superior returns by either fundamental or technical analysis. All public information is completely reflected in the stock price. Market adjusts to information that is publicly available as quickly as possible. Investors can earn on insider information, although trading on insider information is illegal.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What type of market efficiency a technical stock trader believes in - weak, semi-strong, or strong...
What type of market efficiency a technical stock trader believes in - weak, semi-strong, or strong form efficient markets?
Why are the S&P, DOW, and NDX indices considered representative of general USA equity markets?
Why are the S&P, DOW, and NDX indices considered representative of general USA equity markets?
If you fail a test of weak-form efficiency, what does that say about semi-strong and strong...
If you fail a test of weak-form efficiency, what does that say about semi-strong and strong form efficiencies? Explain.
Assume that markets are weak-form efficient, but not semi-strong form or strong form efficient. Which of...
Assume that markets are weak-form efficient, but not semi-strong form or strong form efficient. Which of the following statements is most correct? a. Each common stock has an expected return equal to that of the overall market. b. Bonds and stocks have the same expected return. c. Investors can expect to earn super-normal returns if they have access to public information. d. Investors may be able to earn super-normal returns if they have access to information that has not been...
Why does adidas have sub-brands like adidas Performance, Sports Style, and NEO?
Why does adidas have sub-brands like adidas Performance, Sports Style, and NEO?
Which of the following is inconsistent with the concept of semi-strong efficient markets? A. A diner...
Which of the following is inconsistent with the concept of semi-strong efficient markets? A. A diner in New York City restaurant overhears two men at the next table talking about a merger between their two firms and earns higher profits by purchasing stock based on this information. B. An investor observes that the bonds of an airline that has filed for bankruptcy are selling for an extremely low price and decides to purchase some of the bonds. Fortunately, the airline...
If financial markets are semi-strong form efficient, all investors can effectivley select stocks for their portfolio...
If financial markets are semi-strong form efficient, all investors can effectivley select stocks for their portfolio by throwing darts at the Wall Street Journal stock page. Any stock selected by dart throwing will be just as good an investment as stocks in a professionally-developed portfolio. a. This is false because if you pick stocks via darts, investors may not up with a desirable risk-return combination. b. This is false because professionals can guarantee higher portfolio performance given the same level...
Why does one party receive a premium when dealing with an option? Would an American-style option...
Why does one party receive a premium when dealing with an option? Would an American-style option or a European-style option have a larger premium? Why or why not?
Explain why reactions involving a strong acid and a strong base all have values for standard...
Explain why reactions involving a strong acid and a strong base all have values for standard enthalpy change of about -57 kJ mol-1 Explain why neutralization reactions involving weak acids or weak bases have values which differ from those involving strong acids.
Why does For order-of-magnitude information, it is practical to use correlation between cone penetration resistance and...
Why does For order-of-magnitude information, it is practical to use correlation between cone penetration resistance and the standard penetration test? Need explanation and step by step solution and without plagrism
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT