Weak-Form Efficiency Implies That Past Stock Returns

question 31

Multiple Choice

Weak-form efficiency implies that past stock returns:

• A)form patterns that tend to repeat.
• B)are major inputs to investors for forming trading strategies.
• C)do not matter.
• D)are difficult to explain.

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Definitions:

Substantially Identical

Refers to property or securities that are nearly the same, often used in tax rules concerning wash sales.

Fair Market Value

The price at which an asset would sell on the open market between a willing buyer and a willing seller.

Rental Business

An entrepreneurial activity where an individual or entity rents out properties or equipment to others for a profit.

Adjusted Basis

The original cost of an asset adjusted for improvements, depreciation, and certain tax-related adjustments used to calculate capital gains or losses.