Which of the Following Would Violate the Efficient Market Hypothesis

question 8

Multiple Choice

Which of the following would violate the efficient market hypothesis?

• A)Intel has consistently generated large profits for years.
• B)Prices for shares before share splits show on average consistently positive abnormal returns.
• C)Earning abnormal returns after a firm announces surprise earnings.
• D)High earnings growth shares fail to generate higher returns for investors than low earnings growth shares.

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Definitions:

Deception

The act of concealing or misrepresenting the truth to manipulate or cheat.

Distributive Negotiation

Distributive Negotiation is a negotiation approach where parties believe that there is a limited amount of resources or value to be divided, leading to a win-lose scenario where the gain of one party is at the expense of the other.

Enlightened Self-Interest

Acting to further the interests of others, ultimately benefiting oneself as a result.

Competitive Motivation

Refers to the drive or urge to achieve superiority or victory over others in a situation or activity, especially where resources or rewards are limited.