The Efficient Market Hypothesis

question 159

Multiple Choice

The efficient market hypothesis:

• A)supports the validity of technical analysis but not fundamental analysis.
• B)supports the validity of fundamental analysis but not technical analysis.
• C)supports the validity of both technical and fundamental analysis.
• D)supports the validity of neither technical nor fundamental analysis.
• E)is unrelated to the disciplines of fundamental and technical analysis.

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Definitions:

Perceptual Masking Task

A technique in cognitive psychology used to investigate the limitations of sensory processing by presenting one visual stimulus immediately after another, influencing the perception of the first.

Dichotic Listening Task

A task in which a person hears two or more different, specially recorded messages over earphones and is asked to attend to one of them.

Stroop Task

A task invented by J. R. Stroop in which a participant sees a list of words (color terms) printed in an ink color that differs from the word named (e.g., green printed in blue ink). The participant is asked to name the ink colors of the words in the list and demonstrates great difficulty in doing so relative to a condition in which non-color words form the stimuli.