The Weak Form of the Efficient-Market Hypothesis Asserts That

question 21

Multiple Choice

The weak form of the efficient-market hypothesis asserts that

• A) stock prices do not rapidly adjust to new information contained in past prices or past data.
• B) future changes in stock prices cannot be predicted from past prices.
• C) technicians cannot expect to outperform the market.
• D) stock prices do not rapidly adjust to new information contained in past prices or past data, and future changes in stock prices cannot be predicted from past prices.
• E) future changes in stock prices cannot be predicted from past prices, and technicians cannot expect to outperform the market.

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Definitions:

Short-Run Aggregate Supply

The supply of goods and services that firms in an economy plan on selling over a short period, taking into account the current price levels.

Demand for Money

The desire or need by individuals and businesses to hold money instead of other assets, due to its liquidity and ability to facilitate transactions.

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the principal, charged by lenders to borrowers for the use of assets.

Supply of Money

The overall pool of monetary resources in an economy at a given period.