The weak form of the efficient-market hypothesis asserts that
A) stock prices do not rapidly adjust to new information contained in past prices or past data.
B) future changes in stock prices cannot be predicted from past prices.
C) technicians cannot expect to outperform the market.
D) stock prices do not rapidly adjust to new information contained in past prices or past data, and future changes in stock prices cannot be predicted from past prices.
E) future changes in stock prices cannot be predicted from past prices, and technicians cannot expect to outperform the market.

Question

Quizplus · Accepted Answer

The weak form of the efficient-market hypothesis suggests that all past trading information is already reflected in stock prices, meaning that analyzing past price movements (technical analysis) will not provide an investor with an advantage. Therefore, future stock price movements cannot be predicted based on past prices, and technicians (those who rely on technical analysis) cannot consistently outperform the market.

The Weak Form of the Efficient-Market Hypothesis Asserts That