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:

Expected Value

Expected value is a calculated average outcome of a random event, considering all possible scenarios and their probabilities of occurrence.

Economic Criteria

Standards or measures used to evaluate options, decisions, or outcomes based on their economic impacts, such as cost, profitability, or efficiency.

Satisfice

A decision-making strategy which aims for an acceptable or satisfactory solution, rather than the optimal solution.

Error-Prone Way

A method or process that is likely to lead to mistakes or errors due to inherent flaws or complexities.