A company reports significantly higher earnings on a Monday.You purchase the stock on Tuesday and earn superior returns in the absence of other new information.The market appears to be:

Question

Quizplus · Accepted Answer

If a company's earnings being reported on Monday leads to superior returns on Tuesday, it suggests that the market did not fully reflect the information in the stock price. This indicates that the market is weak-form efficient at best, meaning that past prices and returns cannot be used to predict future prices and returns. However, it could still be semi-strong or strong form efficient as there could be other information not reflected in stock prices.

A Company Reports Significantly Higher Earnings on a Monday