You Discover That You Can Make Greater Than Expected Returns

question 260

Multiple Choice

You discover that you can make greater than expected returns by buying stock in firms whenever the growth rate in sales predicted by an investment survey exceeds the stock's current price-earnings ratio. Which of the following describes this event?

• A) This would not be a violation of market efficiency.
• B) This would be a violation of weak form efficiency.
• C) This would be a violation of semi-strong form efficiency.
• D) This would be a violation of strong form efficiency but not of semi-strong form efficiency.
• E) This would be a violation of all forms of market efficiency.

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