Which of the following (hypothetical) observations would most contradict the proposition that the stock market is...

Which of the following (hypothetical) observations would most contradict the proposition that the stock market is weakly efficient?

Over 25% of mutual funds outperform the market on average.
Insiders earn abnormal trading profits.
Every January, the stock market earns abnormal returns.

Solutions

Expert Solution

Solution

Answer-Every January, the stock market earns abnormal returns.

In weak form of market ,historical trends and patterns cant predict future prices,but in this case(Every January, the stock market earns abnormal returns),there is a regular pattern which is predictable,thus contradicts weak form of market.

jeff jeffy answered 2 years ago

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