Business, 20.11.2019 07:31 kovachb11

Suppose that, after conducting an analysis of past stock prices, you come up with the following observations. which would appear to contradict the weak form of the efficient market hypothesis?

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Answer from: RDS468

Filter rule

Explanation:

An efficient market means that the prices reflect all available information.

Efficient market can be exploited if and only if the stocks are overvalued without regulations restricting some trading activities. With this, some investors observing the trend may be able to form a trading strategy to profit from the price mistakes.

ONE OF THE THINGS THAT CAN CONTRADICT THE WEAK FORM MARKET HYPOTHESIS IS A FILTER RULE.

A FILTER RULE is a classic technical trading rule. It is a predictable pattern and a pattern which is predictable should NOT occur if a stock market is weakly efficient.

Answer from: davidtemple

If based on the analysis we can predict future stock prices correctly then it’s a contradiction of weak form market efficiency hypothesis.

Explanation:

The weak form of the efficient market hypothesis posits that all current information is reflected in current stock prices. It explains that past stock prices do not influence current stock prices. In weak form of the efficient market hypothesis stock prices follow a random walk. Therefore, traders cannot beat the market or make greater returns by analyzing previous stock prices because stock prices are simply random and not determined by its previous values. In other words, technical analysis would be a waste of time.

The weak form of the efficient market hypothesis is one of the degrees of the efficient market hypothesis. Others are semi-strong and strong form efficiency.

Based on this backdrop, if after conducting analysis of past stock prices we get a result that shows that future stock prices are determined by current and previous stock prices, this will be a contradiction of the weak form of the efficient market hypothesis. If the analysis shows that current prices depends on previous stock prices it would be a contradiction of the weak form efficiency. If the analysis show that stock prices does not follow a random walk (random stock prices), then the analysis contradicts the weak form of the efficient market hypothesis. If based on the analysis we can predict future stock prices correctly then it’s a contradiction of weak form market efficiency hypothesis.

Answer from: Quest

a corporation is legally separate from its owner, and it pays its own taxes.

Answer from: Quest

christopher columbus sail the ocean blue 1492

The real estate market is categorized in which way?

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