What Does Weak Form Efficiency Imply

question 23

Multiple Choice

What does weak form efficiency imply?

• A)Portfolio diversification is ineffective as all prices are interrelated.
• B)Past price movement is unrelated to the movement of future prices.
• C)Abnormal returns will disappear within a trading day.
• D)Price patterns that existed in the past will reappear in the future.
• E)A stock with a highly positive serial correlation in the past will maintain that correlation in the future.

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Definitions:

Quarterly Basis

Pertaining to or occurring every quarter of a year, often used in the context of financial reporting or dividend payments.

Homemade Dividend

A strategy where investors create their own dividend stream by selling a portion of their portfolio of equities, as opposed to relying on company-issued dividends.

Ex-Dividend Date

The date on which a stock begins trading without the right to receive the next declared dividend, typically set one business day before the record date.

Convertible Bonds

Convertible bonds are a type of debt security that can be converted into a predetermined number of the issuing company's shares, typically at the discretion of the bondholder.