In: Finance
1. A delayed stock price reaction to a news announcement is evidence of market efficiency.
True
False
2. According to semi-strong form of market efficiency, technical analysis and fundamental analysis will not help the investors.
True
False
3. The day-of-the-week effect is defined as the tendency for Monday to have a positive average rate of return.
True
False
PLEASE ANSWER ALLLLL or i will give you a thumbs down. ALSO, explain your answer. Thank you
1)
FALSE
Market efficiency refers to the degree to which market prices
reflect all available, relevant information. If markets are
efficient, than all information is already incorporated into
prices, and so there is no way to "beat" the market because there
are no under- or overvalued securities available.
In an efficient market, news announcement on stock price will
already be factored in,
2)
TRUE
Semi-strong form efficiency contends that security prices have factored in available market and non-public market information. It concludes that neither fundamental nor technical analysis can be used to achieve superior gains and suggests that only material nonpublic information would benefit investors seeking to earn above average returns on investments.
Therefore, technical and fundamental analysis will not help investors in semi strong form of market efficiency.
3)
FALSE
The day-of-the-week effect refers to the tendency of stocks to exhibit relatively large returns on Fridays compared to those on Mondays.