Which of the Following Stock Price Observations Would Appear to Contradict

question 33

Multiple Choice

Which of the following stock price observations would appear to contradict the weak form of the efficient market hypothesis?

• A) The average rate of return is significantly greater than zero.
• B) The correlation between the market return one week and the return the following week is zero.
• C) You could have consistently made superior returns by buying stock after a 10% rise in price and selling after a 10% fall.
• D) You could have consistently made superior returns by forecasting future earnings performance with your new Crystal Ball forecast methodology.

---

Definitions:

Germinal Stage

The first fortnight of embryonic growth post-fertilization, marked by swift cellular proliferation and the onset of cell specialization.

Foetal Stage

The period in human development that begins about nine weeks after fertilization and continues until birth, during which significant growth and development occur.

Prenatal Development

The process of growth and development within the womb, where human beings develop from a single cell to a full-term infant.

Foetal Stage

The developmental period in humans from the ninth week after conception until birth, during which significant growth and organ development occur.