Question

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 publicly revealed.

e. Statements c and d are correct.

Answer #1

In a week form Efficient market, only the historical events have been reflected in to the current price and current price will not be having any kind of impact over the future price

So it can be said that those who are having an access to privately available information will be having the most chance of making money in weak form efficient because that information have not been discounted but other publicly available information does not offer with the same choice because they can mean that they have been discounted to certain extent so privately available information will be providing an edge over other investment opportunities.

Correct answer will be option (d) investor may be able to earn supernormal return if they have access to information that has not been publicly

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...

Which of the following statements is most correct?
If a market is strong-form efficient this implies that the
returns on bonds and stocks should be identical.
If a market is weak-form efficient this implies that all public
information is rapidly incorporated into market prices.
If a market is semi-strong weak-form efficient this implies
that all private information is rapidly incorporated into market
prices.
None of the above statements is correct.

Most academic research supports markets as
efficient.
not at all
weak form
strong form
semi-strong form

The current literature generally concludes that the share
markets in the developed countries are semi-strong form efficient
but not strong form efficient. Which of the following statements is
consistent with the finding?
Select one:
a. Fundamental analysis will not yield any return as the current
share price reflects all publicly available information.
b. Technical analysis is still useful and gives the investor an
advantage over others.
c. The current share price reflects both public and private
information.
d. Insider trading...

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...

Suppose that investors have not been able to earn excess returns
using newly released announcements about the firms. Based on this
statement only, which of the following must be correct?
a. Markets are semi-strong-form efficient, but not weak-form
efficient.
b. Markets are at least weak-form and semi-strong-form
efficient.
c. Markets are weak-form efficient, but not semi-strong-form
efficient.
d. Markets are semi-strong-form efficient, but not weak-form
efficient.
e. Markets are definitely strong-form efficient.

According to which form(s) of the Efficient Markets Hypothesis
will the price of Stock B immediately adjust by the correct amount
(there is no under- or overreaction), when a brand new piece of
information about Stock B becomes public? Choose the best answer
below. Select one: The weak form The semi-strong form The strong
form The weak and semi-strong forms The weak and strong forms The
semi-strong and strong forms The weak, semi-strong, and strong
forms

1a.According to the semi-strong form of the efficient market
hypothesis:
A. Private information is of no help in earning abnormally high
returns.
B. Using past price and volume information, one can earn
abnormally high returns from stocks.
C. Using insider information, one can earn abnormally high
returns from stocks.
D. Financial statement analysis cannot be used to earn
abnormally high returns from stocks.
E. Equity Analysts are always correct in predicting the best
stocks.
1b. The duration of a 270-day...

Which of the following statements related to strong and
semi-strong market efficiency are true?
In a semi-strong form efficient market, all past price and
trading information (but not all other publicly available
information) is fully impounded into current market prices
In a strong form efficient market, corporate insiders are not be
able to make superior profits to the market through private
information
In a semi-strong form efficient market, investors using
fundamental analysis (but not technical analysis) will be able to...

Q1:
Representativeness, according to financial economists, leads
to:
strong form efficient financial markets.
stable stock returns over both short and long periods of
time.
stock price under reactions to new information.
abnormal long-term profits.
overreactions in stock returns.
Q2:
The efficient market hypothesis says that, on average,
professional investors will:
tend to earn below average rates of returns.
outperform investors with inside information.
earn a normal rate of return.
earn the same rate of return over time regardless of the...

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