Suppose That Firms with Unexpectedly High Earnings Earn Abnormally High

question 22

Multiple Choice

Suppose that firms with unexpectedly high earnings earn abnormally high returns for several months after the announcement. This would be evidence of:

• A) efficient markets in the weak form.
• B) inefficient markets in the weak form.
• C) efficient markets in the semistrong form.
• D) inefficient markets in the semistrong form.
• E) inefficient markets in the strong form.

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Definitions:

Sensory Sensitivity

An increased or heightened response to sensory stimuli, such as sounds, lights, or textures, which can be overwhelming or uncomfortable.

Theory Of Mind

The ability to attribute mental states—beliefs, intents, desires, emotions, knowledge—to oneself and others and to understand that others have beliefs, desires, and intentions that are different from one's own.

Cognitive Flexibility

The mental ability to switch between thinking about two different concepts, and to think about multiple concepts simultaneously.

False Beliefs

Incorrect or unfounded convictions held despite contrary evidence.