An investor discovers that for a certain group of stocks,large positive price changes are always followed by large negative price changes. This finding is a violation of the:
A) moderate form of the efficient market hypothesis.
B) semistrong form of the efficient market hypothesis.
C) strong form of the efficient market hypothesis.
D) weak form of the efficient market hypothesis.
E) None of these.

Question

Quizplus · Accepted Answer

The weak form of the efficient market hypothesis states that past price movements and volume data do not affect stock prices. If large positive price changes are predictably followed by large negative price changes, it suggests that past price information can be used to predict future price movements, violating the weak form.

An Investor Discovers That for a Certain Group of Stocks,large