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A weak form of market efficiency implies that:Group of answer choicesa security's price at a particular time fully reflects both publicly and privately available information.a security's price at a particular time fully reflects the information contained in its sequence of past prices.investors would be unable to earn abnormal returns by trading on private information.investors would be able to earn abnormal returns by using publicly available information.

Question

A weak form of market efficiency implies that:Group of answer choicesa security's price at a particular time fully reflects both publicly and privately available information.a security's price at a particular time fully reflects the information contained in its sequence of past prices.investors would be unable to earn abnormal returns by trading on private information.investors would be able to earn abnormal returns by using publicly available information.

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Solution

The weak form of market efficiency implies that a security's price at a particular time fully reflects the information contained in its sequence of past prices. This means that all past market information is already incorporated into the stock's price. Therefore, technical analysis or the study of past stock prices to predict future prices would not be able to consistently produce returns greater than those of a random selection of securities.

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Similar Questions

According to the strong-form efficient market hypothesis, stock prices fully reflectGroup of answer choicesall public and private information.all security market information only.all public information only.all private information only.limited public and private information.

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According to the efficient market hypothesis, prices of securities in financial markets fully reflect which of the following?Group of answer choicesPrivate informationAll available informationLimited informationOnly past information

Which one of the following statements is NOT true?Group of answer choicesIn an informationally efficient market, market prices adjust quickly to new information about a security as it becomes available.Competition among investors is an important driver of market efficiency.In a semi strong efficient market, information about past price movements is already incorporated in the current market price.If market prices reflect all relevant information about securities at a particular point in time, the market is informationally efficient.In a semi strong efficient market, market prices adjust quickly to new information about a security as it becomes available.

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