An investor discovers that for a certain group of equities, large positive price changes are always followed by large negative price changes.This ﬁnding is a violation of the:
A)moderate form of the eﬃcient market hypothesis.
B)semistrong form of the eﬃcient market hypothesis.
C)strong form of the eﬃcient market hypothesis.
D)weak form of the eﬃcient market hypothesis.
E)None of the above.

Question

Quizplus · Accepted Answer

The weak form of the efficient market hypothesis posits that all past trading information is already reflected in stock prices, and thus, it is impossible to achieve superior gains by analyzing past price movements. If an investor can predict future price movements based on past price changes, it contradicts the weak form of the efficient market hypothesis.

An Investor Discovers That for a Certain Group of Equities