Most Studies of Stock Market Efficiency Suggest That the Stock

question 59

Multiple Choice

Most studies of stock market efficiency suggest that the stock market is highly efficient in the weak form and reasonably efficient in the semistrong form.Based on these findings,which of the following statements is correct?

• A)Information disclosed in companies' most recent annual reports can be used to consistently beat the market.
• B)The stock price for a company has been increasing for the past 6 months. Based on this information, it must be true that the stock price will also increase during the current month.
• C)Information you read in a daily newspaper such as National Post today cannot be used to select stocks that will consistently beat the market.
• D)Managers who have inside information that is not available to the public cannot consistently earn abnormal returns, i.e., returns that are higher than those predicted by the SML.

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Definitions:

Calorie

A unit of energy often used to quantify the amount of energy food provides to the human body.

Van der Waals Interaction

A weak force of attraction between molecules or parts of molecules that results from transient fluctuating electrical charges.

Hydrogen Bond

A weak chemical bond formed between the hydrogen atom of one molecule and an electronegative atom (often oxygen or nitrogen) of another molecule.

Ionic Bond

A chemical bond formed between two ions with opposite charges through the transfer of one or more electrons from one atom to the other.