An investor discovers that for a certain group of stocks,large positive price changes are always followed by large negative price changes.This finding is a violation of the ________ form of the efficient market hypothesis.
A)moderate
B)semistrong
C)strong
D)weak
E)historical

Question

Quizplus · Accepted Answer

The weak form of the efficient market hypothesis posits that all past trading information is already reflected in stock prices, and thus, investors cannot earn excess returns by analyzing past price movements. If large positive price changes are always followed by large negative price changes, it suggests that past price movements can predict future price movements, which violates the weak form of the efficient market hypothesis.

An Investor Discovers That for a Certain Group of Stocks,large