There have been many studies over time debating the efficiency of the stock market and just...

There have been many studies over time debating the efficiency of the stock market and just how much information is embedded within the stock price.. In your opinion which form of the efficient market hypothesis do you believe the financial markets behave like?

Solutions

Expert Solution

There are three forms of EMH

1) Weak form: We cannot predict future price based on past price.

2) Semi weak: Any published information cannot be used to predict future price as it has been reflected in the price.

3) Strong form: All forms of information published and unpublished can not be used.

According to me weak and Semi strong form has certain validity as the past prices can be used to predict future prices bu doing technical analysis as there have been people who make profits using it.

Also, Semi strong analysis also holds true because an investor is generally aware of the fundamental and technical aspects and make decision using it.

The third one seems to be incorrect as the unpublished info is not available with the investors and it does not reflect in the price of the stock. Even unpublished info is available with all the investors then only way to earn income would be insider information.

jeff jeffy answered 2 hours ago

Next > < Previous

Related Solutions

You have observed the following returns over time: Year Stock X Stock Y Market 2015...

You have observed the following returns over time: Year Stock X Stock Y Market 2015 15% 14% 13% 2016 18 5 9 2017 -16 -3 -11 2018 2 2 2 2019 20 12 17 Assume that the risk-free rate is 6% and the market risk premium is 4%. a. What are the betas of Stocks X and Y? Stock X: 1.3 Stock Y: b. What are the required rates of return on Stocks X and Y? Stock X: 11.2 %...

You have observed the following returns over time: Year Stock X Stock Y Market 2011 15...

You have observed the following returns over time: Year Stock X Stock Y Market 2011 15 % 14 % 12 % 2012 20 7 8 2013 -13 -4 -12 2014 3 1 1 2015 21 11 14 Assume that the risk-free rate is 4% and the market risk premium is 6%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. What is the beta...

You have observed the following returns over time: Year Stock X Stock Y Market 2011 13...

You have observed the following returns over time: Year Stock X Stock Y Market 2011 13 % 11 % 10 % 2012 20 7 9 2013 -13 -6 -10 2014 3 1 1 2015 20 11 17 Assume that the risk-free rate is 4% and the market risk premium is 6%. What is the beta of Stock X? Do not round intermediate calculations. Round your answer to two decimal places. What is the beta of Stock Y? Do not round...

Many things have been used as money over time: cigarettes, gold, paper currency (like the U.S....

Many things have been used as money over time: cigarettes, gold, paper currency (like the U.S. dollar), etc. Describe the functions of money and consider the U.S. dollar as an example. Although the U.S. dollar has little or no intrinsic value, why do people want it so much? Can you think of other examples of things that act as “money” in our society? in detail please type answer

many things have been used as money over time: cigarettes, gold, paper currency (like the U.S....

many things have been used as money over time: cigarettes, gold, paper currency (like the U.S. dollar), etc. Describe the functions of money and consider the U.S. dollar as an example. Although the U.S. dollar has little or no intrinsic value, why do people want it so much? Can you think of other examples of things that act as “money” in our society?

Many things have been used as money over time: cigarettes, gold, paper currency (like the U.S....

Over time, there have been technological advances in the production of radios. At the same time,...

Over time, there have been technological advances in the production of radios. At the same time, it has become less popular to listen to radio. Taking these two events into account, what would be the likely effect on the wages of workers who manufacture radios?

There have been many studies that suggest global climate change is aﬀecting the population of polar...

There have been many studies that suggest global climate change is aﬀecting the population of polar bears. One measure of the health of a polar bear population is weight, and the mean weight for a male polar bear is approximately 900 pounds with population deviation 78 pounds. A recent study suggests that the polar bears in the Chukchi Sea are doing very well despite changes in the climate. A random sample of 14 male polar bears from the Chukchi Sea...

What is the difference between static efficiency for one period in time and dynamic efficiency over...

What is the difference between static efficiency for one period in time and dynamic efficiency over multiple periods? What is the discount rate and how is it used to compare a future dollar benefit to a present-day benefit? Suppose that you could have a sum of $1,000 today or 1,500 next year and the interest rate happened to be 10%. Which would be more valuable? Show your work.

What is the difference between static efficiency for one period in time and dynamic efficiency over...

What is the difference between static efficiency for one period in time and dynamic efficiency over multiple periods? What is the discount rate and how is it used to compare a future dollar benefit to a present-day benefit? Suppose you could have a sum of $1,000 today or 1,500 next year and the interest rate happened to be 10%. Which would be more valuable? Show your work. Yes this is supposed to be a single question just with multiple parts.

Subjects