The weak form of the efficient market hypothesis asserts that:
A) the change in future share prices cannot be predicted from past share prices.
B) share prices adjust rapidly to new information contained in past prices or past data.
C) technical analysts cannot be expected to outperform the market.
D) all of the given answers are correct.

Question

Quizplus · Accepted Answer

The weak form of the efficient market hypothesis states that market prices adjust rapidly and completely to new public information, making it impossible to achieve abnormal returns on the basis of past prices, volume, and other historical data. This implies that future share price changes cannot be predicted from past data, technical analysis is not a reliable tool for outperforming the market, and investors cannot consistently earn excess profits by trading on publicly available information. Therefore, all of the given answers are correct.

The Weak Form of the Efficient Market Hypothesis Asserts That