empirical evidence supports the notion that U.S. stock markets are generally____form efficient. a. weak b. semi-string...

empirical evidence supports the notion that U.S. stock markets are generally____form efficient.
a. weak
b. semi-string
c. strong
d. the studies have shown mixed results.

Expert Solution

an efficient market is that market where the investor is rational which means logical they try to predict the market either by the past pattern and try to maximize the returns. Theory suggests three forms of hypothesis

1)weak-they believe there is no pattern in price and everything is included in the price, so technical analysis is of no use, Only fundamental analysis can help you to earn more return

2)semistrong=everything thing is included in the price and no analysis can help to earn an extra return. Only way to earn extra return is to use the information which is not readily available to investors

3)strong=they suggest all is been included in price whether it is known in the public domain or not . There is no way to earn extra return

There are many anomalies which this theory is unable to explain

USA market can be considered as a semi-strong form of the market as many analysts are aware of technical and fundamental analysis so that is common But when the new information like Job data or any global news comes which is not known to public market react and give chance to earn extra return

jeff jeffy answered 2 years ago

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