A Weak Form of Market Efficiency Implies That

question 7

Multiple Choice

A weak form of market efficiency implies that:

• A) investors would be able to earn abnormal returns by using publicly available information.
• B) a security's price at a particular time fully reflects the information contained in its sequence of past prices.
• C) investors would be unable to earn abnormal returns by trading on private information.
• D) a security's price at a particular time fully reflects both publicly and privately available information.

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Definitions:

Net Income

The total earnings of a company after deducting all expenses and taxes from total revenue.

Drawings

Amounts withdrawn by the owner(s) of a business for personal use.

FASB

The Financial Accounting Standards Board (FASB) is a private organization that establishes financial accounting and reporting standards for companies and nonprofit organizations in the United States.

SEC

Stands for the Securities and Exchange Commission, a U.S. federal agency responsible for regulating the securities industry and protecting investors.