In Order to Test the Weak Form of the Efficient-Market

question 25

Multiple Choice

In order to test the weak form of the efficient-market hypothesis, researchers have used the following methods except

• A)estimation of the serial correlation (autocorrelation)for securities and markets.
• B)measurement of the profitability of trading rules used by technical analysts.
• C)measurement of how rapidly security prices adjust to different news items.
• D)All of the options are methods used for testing weak-form market efficiency.

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Definitions:

Stock Price

The current price at which a share of a company is trading on the stock market.

Signaling Theory

A concept in economics and finance that suggests that decisions made by companies can convey information to investors and the market about the firm's future prospects.

Dividend Irrelevance

Dividend Irrelevance theory suggests that a company's dividend policy has no effect on either its value or its cost of capital, according to Modigliani and Miller.

Growth Created Value

The increase in value that a company achieves through the expansion of its operations or activities.