For statistical tests of stock returns over time to support the efficient markets hypothesis (EMH), the resulting correlations should be:
A) positive.
B) approximately 1.
C) approximately -1.
D) approximately 0.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis suggests that stock prices fully reflect all available information, implying that past returns should not predict future returns. Therefore, the correlations of stock returns over time should be approximately 0, indicating no predictable pattern.

For Statistical Tests of Stock Returns Over Time to Support