WEEK 6 - EFFICIENT MARKET HYPOTHESIS
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Questions and Answers

Insider Trading is not possible in a market that is _______________

  • Weak Form Efficient
  • Semi-Strong Form Efficient
  • Strong Form Efficient (correct)
  • None of the Above

    • Technical analysis should never work in a market that is _____

  • Weak Form Efficient
  • Semi-Strong Form Efficient
  • Strong Form Efficient
  • All the Above (correct)

    • Which one of the following statements is correct?

  • The information set of weak-form efficient market include publicly available information.
  • The information set of strong-form efficient market does NOT include private information.
  • The information set of past prices is a subset of the information set of publicly available information. (correct)
  • According to efficient market hypothesis, the stock prices adjust slowly to the new information.

    • Aerotech, an aerospace technology research firm, announced at 11:00 am this morning that it hired the world’s most knowledgeable and prolific space researchers yesterday. Before today Aerotech’s stock had been selling for $100. Assume that no other information is received over the next week and the stock market as a whole does not move. Consider the following scenarios, which one indicates strong-form market efficiency.

    <p>The stock price jumps to $120 just when the stock market open at 9:30 am</p> Signup and view all the answers

    If the market is in strong form efficient, which one of the following statements is correct?

    <p>All about are correct</p> Signup and view all the answers

    A stock market is 'efficient' if

    <p>Share prices respond rapidly and appropriately to new information</p> Signup and view all the answers

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