An Investor Discovers That for a Certain Group of Stocks

question 10

Multiple Choice

An investor discovers that for a certain group of stocks, large positive price changes are always followed by large negative price changes. This finding is a violation of the:

• A) moderate form of the efficient market hypothesis.
• B) semi-strong form of the efficient market hypothesis.
• C) strong form of the efficient market hypothesis.
• D) weak form of the efficient market hypothesis.

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Definitions:

Average Inventory

A metric that estimates the amount of inventory a business has on hand over a certain period, calculated by taking the sum of the beginning and ending inventory levels divided by two.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made on a periodic basis, as opposed to continuously.

Cost Of Goods Sold

The direct financial outlays for labor and materials that are necessary for producing goods a company sells.