In Tests of the Semistrong-Form Efficient Market Hypothesis, an Adjustment

question 124

Multiple Choice

In tests of the semistrong-form efficient market hypothesis, an adjustment for market effects is carried out by

• A) calculating the historical return.
• B) calculating the market rate of return.
• C) calculating the abnormal rate of return.
• D) calculating the cross-sectional return.
• E) calculating the monthly return.

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Definitions:

Accounting Equation

The fundamental equation of double-entry bookkeeping that states assets equal liabilities plus equity, serving as the foundation for a balance sheet.

Owner's Equity

The total value of assets owned by the proprietor of a company after all debts have been subtracted.

Balance Sheet

A delineation of a company's financial status including assets, liabilities, and shareholders' equity at an exact point in time.