Which of the Following Observations Provides Evidence Against Strong-Form Market

question 37

Multiple Choice

Which of the following observations provides evidence against strong-form market efficiency?

• A) Some mutual funds outperformed the market in 1997.
• B) Managers trading in their own stock obtain superior returns.
• C) You cannot make superior profits by trading stocks after earnings reports are issued.
• D) Stock prices follow a random walk.

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Definitions:

Process Costing System

An accounting system used for homogenous products that are mass-produced, assigning costs to units of product based on the process they go through.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, expressing the work done in terms of fully completed goods.

Weighted-Average Process

A method of accounting for inventory and production costs that averages costs over the units produced during a period, widely used in process manufacturing.

Units Completed

The number of finished goods produced during a specific period, ready for sale or distribution.