Tests of Market Efficiency Are Often Referred to as Joint

question 82

Essay

Tests of market efficiency are often referred to as joint tests of two hypotheses: that the market is efficient and that an expected returns model holds.Explain.Is it ever possible to test market efficiency alone (i.e.,without also testing some type of asset-pricing model)?

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Definitions:

Response Time

The amount of time taken to respond to a specific stimulus or event.

Spatial Task

A task that requires the individual to navigate, manipulate, or understand spatial relationships among objects or in an environment.

Sampling Bias

A bias in which certain members of a population are systematically more likely to be selected in a sample than others, skewing the results.

Representative

Someone or something that serves as a typical or excellent example of a class, group, or quality.