Which of the following statements related to market efficiency tends to be supported by current evidence?
i.Markets tend to respond quickly to new information.II.It is difficult for the typical investor to earn above-average returns without taking above-average risks.III.Short-run prices are difficult to predict accurately based on public information.IV.Markets are most likely strong-form efficient.
A) I and III only
B) II and IV only
C) I and IV only
D) I,III,and IV only
E) I,II,and III only

Question

Quizplus · Accepted Answer

Current evidence supports the ideas that markets respond quickly to new information (I), it is difficult for the typical investor to earn above-average returns without taking above-average risks (II), and short-run prices are difficult to predict accurately based on public information (III). Strong-form efficiency, which suggests that all information (public and private) is already reflected in stock prices, is not widely supported by current evidence, making IV incorrect.

Which of the Following Statements Related to Market Efficiency Tends