Which Statement Regarding Market Efficiency Is True

question 91

Multiple Choice

Which statement regarding market efficiency is true?

• A)Semistrong-form market efficiency implies that as soon as any public or private information comes into being it is incorporated into stock prices.
• B)Weak-form market efficiency implies that recent trends in stock prices are of no use in predicting future stock prices.
• C)Market efficiency implies that all stocks should have the same expected return.
• D)According to strong-form market efficiency, insiders would find it possible to consistently earn abnormal returns in the stock market even if they have superior knowledge about the company.

---

Definitions:

Serial Position Effect

A cognitive bias where individuals tend to remember the first and last items in a series better than those in the middle.

Recall

The process of retrieving information from memory without the aid of explicit cues.

Priming

A psychological effect in which exposure to a stimulus influences a response to a subsequent stimulus, without conscious guidance or intention.

Spoken Word

A performance art that focuses on the aesthetics of word play, intonation, and voice inflection to deliver poetry or storytelling.