Which of the Following Observations Would Provide Evidence Against the Strong

question 47

Multiple Choice

Which of the following observations would provide evidence against the strong form of efficient market theory?
I.Mutual fund managers do not on average make superior returns.
II.In any year approximately 50% of all pension funds outperform the market.
III.Managers who trade in their own firm's stocks make superior returns.

• A)I only
• B)II only
• C)III only
• D)I and II only

---

Definitions:

Signal Detection

A theory and method for quantifying the ability to discern between information-bearing patterns and random patterns that distract from the information.

Naysayers

Individuals who are often negative or skeptical about ideas and refuse to believe that something might be successful or positive.

Yea-Sayers

Individuals who habitually agree with or support a particular idea, person, or group.

Hits

In the context of memory and recognition, correct identifications of previously seen or experienced stimuli.