Assume That Markets Are Semistrong Efficient,but Not Strong-Form Efficient

question 30

Multiple Choice

Assume that markets are semistrong efficient,but not strong-form efficient.Which of the following statements is correct?

• A)Each common stock has an expected return equal to that of the overall market.
• B)Investors may be able to earn returns above those predicted by the SML if they have access to information that has not been publicly revealed.
• C)Investors can expect to earn returns above those predicted by the SML if they have access to public information.
• D)Investors should expect to earn more than the returns that are predicted by the SML, because if they do not, they should not invest in the stock market.

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Definitions:

Preoperational Stage

The second stage in Piaget’s scheme, characterized by inflexible and irreversible mental manipulation of symbols.

Cognitive Development

The study of how thinking, problem solving, and intelligence evolve as people age, primarily focusing on childhood developmental stages.

Mental Representations

The mental forms that a real object or event can take.

Objects

Material things that can be seen and touched, often regarded in contrast to concepts, ideas, or feelings that are intangible.