In Order to Test the Efficient-Market Hypothesis in the Semi-Strong

question 4

Multiple Choice

In order to test the efficient-market hypothesis in the semi-strong form, researchers have used (the) :

• A) Estimation of the serial correlation (autocorrelation) for securities and markets
• B) Measurement of the performance of mutual fund managers over the years
• C) Measurement of how rapidly security prices adjust to different news items
• D) All of the above

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Definitions:

Beta

An indicator of the degree to which a particular stock's movement is volatile compared to the general market, conveying the risk level of the stock relative to the market norm.

Risk-Free Rate

A return on an investment that is guaranteed not to result in financial loss, usually tied to state bonds.

Expected Return

The anticipated profit or loss from an investment, taking into consideration the potential outcomes and their probabilities.

Earnings Growth Rate

The rate at which a company's net income is expected to grow, often used to evaluate the future profitability of a business.