An investor finds that for a particular group of shares,large positive price changes are always followed by large negative price changes.This finding violates:
A) the strong form of the efficient market hypothesis.
B) the semi-strong form of the efficient market hypothesis.
C) the weak form of the efficient market hypothesis.
D) none of the given choices.

Question

Quizplus · Accepted Answer

This finding violates the weak form of the efficient market hypothesis, which posits that all past trading information is already reflected in stock prices, and thus, one cannot consistently achieve higher returns by analyzing past price movements or trading volumes. If large positive changes are always followed by large negative changes, it suggests predictability based on past prices, contradicting the weak form efficiency.

An Investor Finds That for a Particular Group of Shares,large