In order to confirm the weak-form efficient market hypothesis,an examination of stock price runs over time would reveal that stock price changes over time were
A) Highly positively correlated.
B) Moderately positively correlated.
C) Highly negatively correlated.
D) Moderately negatively correlated.
E) None of the above.

Question

Quizplus · Accepted Answer

The weak-form efficient market hypothesis holds that stock price changes are independent of each other and unpredictable based on past prices. Therefore, there should be no correlation in stock price runs over time. Choosing E, "None of the above", is the best choice as it indicates that there is no correlation, which confirms the weak-form efficient market hypothesis.

In Order to Confirm the Weak-Form Efficient Market Hypothesis,an Examination