If Security Markets Are Semistrong-Form Efficient, Investors Cannot Solely Use

question 3

Multiple Choice

If security markets are semistrong-form efficient, investors cannot solely use ____ to earn excess returns.

• A) previous price movements
• B) insider information
• C) publicly available information
• D) A and C

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Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Confirmation Bias

The propensity to find, interpret, choose, and recollect details in a way that corroborates the existing beliefs or hypotheses of a person.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it.

Availability Heuristic

A cognitive bias that causes people to overestimate the likelihood of events based on their ability to recall examples more easily.