An Investor Discovers That for a Certain Group of Stocks

question 30

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)semistrong form of the efficient market hypothesis.
• C)strong form of the efficient market hypothesis.
• D)weak form of the efficient market hypothesis.
• E)None of the above.

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Definitions:

Exchange Rate Risk

Exchange rate risk, or currency risk, refers to the potential for loss due to fluctuations in the foreign exchange rate between two currencies.

Political Risk

The risk of losing money due to changes in a country's political landscape or government policies that negatively affect investments.

International Diversification

The strategy of spreading investment risk by purchasing assets in various countries, aiming to reduce overall investment risk.

International Financial Management

The discipline concerned with managing financial resources in a global market, including investment, financing strategies, and risk management across borders.