Which of the following beliefs would not preclude charting as a method of portfolio management?
A) The market is strong-form efficient.
B) The market is semistrong-form efficient.
C) The market is weak-form efficient.
D) Stock prices follow recurring patterns.

Question

Quizplus · Accepted Answer

Charting, or technical analysis, relies on the belief that stock prices follow recurring patterns. This belief is incompatible with the efficient market hypothesis (EMH) in its strong, semistrong, and weak forms, which all suggest that past price information is already reflected in current prices to varying degrees. However, the belief in recurring patterns does not conflict with the use of charting, making it the correct choice.

Which of the Following Beliefs Would Not Preclude Charting as a Method