Asked by Spencer Baker on Jun 17, 2024
Verified
Most tests of semistrong efficiency are ________.
A) designed to test whether inside information can be used to generate abnormal returns
B) based on technical trading rules
C) unable to generate any evidence of market anomalies
D) joint tests of market efficiency and the risk-adjustment measure
Semistrong Efficiency
A form of market efficiency that asserts all public information is reflected in stock prices, alongside past trading information.
Market Anomalies
Price patterns or other market behaviors that deviate from the efficient market hypothesis and could potentially be exploited for profit.
- Perceive the essence of market efficiency in various forms and its implications for investment strategy crafting.
- Evaluate scholarly studies pertaining to irregular market behaviors and the impacts of insider trading.
Verified Answer
IE
Idris ElgabalawyJun 23, 2024
Final Answer :
D
Explanation :
Most tests of semistrong efficiency are indeed joint tests of market efficiency and the risk-adjustment measure. This means they not only assess whether all publicly available information is reflected in stock prices (semistrong efficiency) but also whether the method used to adjust for risk accurately captures the risk-return relationship.
Learning Objectives
- Perceive the essence of market efficiency in various forms and its implications for investment strategy crafting.
- Evaluate scholarly studies pertaining to irregular market behaviors and the impacts of insider trading.
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