The weak form of the efficient market hypothesis contradicts
A)technical analysis, but supports fundamental analysis as valid.
B)fundamental analysis, but supports technical analysis as valid.
C)both fundamental analysis and technical analysis.
D)technical analysis, but is silent on the possibility of successful fundamental analysis.
E)none of the above.

Question

Quizplus · Accepted Answer

The weak form of the efficient market hypothesis suggests that past market prices and trading volume cannot be used to predict future stock prices. Therefore, it contradicts technical analysis, which relies on studying historical price and volume data to predict future price movements. However, the hypothesis is silent on the possibility of successful fundamental analysis, which looks at the underlying financial and economic factors affecting a company's value, so it does not contradict it. So, the choice (D) is the best answer.

The Weak Form of the Efficient Market Hypothesis Contradicts