Question

18.Please read a news report from Wall Street Journal as below and pick the correct analysis about the stock market.

Dow jiunps 900 poinls afler Mccine disclosure drives Modern。shares higher

UDdaled Aday 18, 2020 5:01 pm EThttDs/www.bloomberg-Com/news：

The Dow Jones Industrial Average surged more than 900 points Monday, its best day since April 6, on hopefill developments surrounding a potential coronavirus vaccine.

US stocks surged on Monday as Moderna, a biotech, announced that its coronavirus vaccine candidate had shown encouraging progress. In a small number of healthy volunteers, Moderna's vaccine helped create immune responses that may help protect people from being infected with the novel coronavirus. The biotech is planning to start additional trials immediately and aiming to be ready [his fall for potential emergency use of its vaccine.

Investors have been closely watching for updates that can provide guidance about economic-reopening efforts, and they were encouraged by Moderna's results.

Monday's gains erased losses from last week, when the major indexes slumped following data that showed the economic impact of the coronavirus pandemic.

Here's where US indexes stood at 1:40 p.m. ET on Monday:

•S&P 500: 2,957.84, up 3.3%

•Dow Jones industrial average: 24,573.76, up 3.75% (888 points)

•Nasdaq composite: 9,249.28, up 2.6%

Modern。Stock Phmaed Today (May 20, 2020, 4:04 AM GMT+8 )

Shares of Moderna (NASDA Q:MRNA) fell 10% on Tuesday after the biotechnology^ company said it would seek to raise more than SI. 3 billion in cash via a public share offering. Moderna intends to use the proceeds from the stock sale to fund the manufacturing of mRNA-1273fbr distribution in the U.S. and international markets, pending regulatory^ approval. The company also said that any funds not needed for the production

of mRNA-1273 will be used for the research and development of other drugs in its pipeline, as well as technology investments and general corporate purposes.

According to the market information above, we can infer that

A.USA stock market are in semi-weak form of market efficiency.

B.USA stock market are in weak form of market efficiency.

C.USA stock market are in semi-strong form of market efficiency.

D.USA stock market are in strong form of market efficiency.

E.None of above. The stock market does not have information efficiency and the investors are totally irrational

Answer 1

This reference is advocating that the United State market are in semi strong efficient form of market.

This is because all the publicly available information have already been discounted into the stock price but all the privately available information have not been discounted into the stock price .

This can be seen through two of the instances in the following case-

I. When the company named Moderna suggested that it has announced the coronavirus vaccine, the management would have already known about it but the share price was not reflective of the same information so it can be said privately available information was not discounted in the stock price.

II.when the company announced that it would seek to raise more than 1.3 billion of cash via public share offering, the management would have already been aware of the similar situation but it was never discounted into the stock price so it can be said that privately available information are not discounted into this stock price.

Correct answer would be option ( C) United States of America stock markets are in semi strong form of market efficiency.