You discover you can make above normal returns if you buy oil-company stocks just before noon on any given trading day and then sell them immediately before the market closes that same day. Which of the following describes this event?

Question

Quizplus · Accepted Answer

This scenario describes a violation of weak form efficiency, which posits that all past trading information is already reflected in stock prices, and thus, one cannot consistently achieve higher returns by analyzing past price movements or trading volumes. If you can systematically profit from buying and selling stocks based on the time of day, it suggests that not all information contained in past prices is fully reflected in the current stock prices, contradicting the weak form efficiency hypothesis.

You Discover You Can Make Above Normal Returns If You