The Efficient Market Hypothesis Applies to

question 43

Multiple Choice

The efficient market hypothesis applies to

• A) both the stock market and the foreign exchange market.
• B) the stock market but not the foreign exchange market.
• C) the foreign exchange market but not the stock market.
• D) neither the stock market nor the foreign exchange market.

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Definitions:

Correlation Coefficients

Numeric measures that describe the strength and direction of the relationship between two variables.

Direct Correlation

A statistical relationship between two variables where both variables move in the same direction.

Nondirectional Correlation

Nondirectional correlation describes the relationship between two variables without specifying whether the relationship is positive or negative, indicating only that a correlation exists.

Unidirectional Correlation

A correlation where an increase in one variable is consistently associated with an increase or decrease in another variable, without reversals in direction.