An autocorrelation test that results in supporting weak form stock market efficiency should indicate:
A) a definite, repetitive pattern of price historical price movements.
B) no historical pattern of consistent price movements.
C) considerable evidence of a congestion area before breakout on a consistent basis.
D) consistent patterns of stock price movements before release of insider information.

Question

Quizplus · Accepted Answer

Weak form stock market efficiency suggests that past trading information, such as historical prices and volumes, is already reflected in stock prices and cannot be used to achieve consistent excess returns. Therefore, an autocorrelation test supporting weak form efficiency would indicate no historical pattern of consistent price movements, as past information is of no use in predicting future prices.

An Autocorrelation Test That Results in Supporting Weak Form Stock