question archive Which of the following statements is most correct? If a market is strong-form efficient this implies that the returns on bonds and stocks should be identical
Which of the following statements is most correct? If a market is strong-form efficient this implies that the returns on bonds and stocks should be identical
Subject:BusinessPrice:2.87 Bought7
Which of the following statements is most correct?
| If a market is strong-form efficient this implies that the returns on bonds and stocks should be identical. |
| If a market is weak-form efficient this implies that all public information is rapidly incorporated into market prices. |
| If a market is semi-strong weak-form efficient this implies that all private information is rapidly incorporated into market prices. |
| None of the above statements is correct. |
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Answer:
None of the above statements is correct.
Explanation:
As per efficient market hypothesis,
In weak form efficient market, all past data is reflected in current stock price and technical analysis cannot be used to generate excess returns
In semi-strong form efficient market, all public information is reflected in the current stock price and both technical and fundamental analysis cannot be used to generate excess returns
In strong form efficient market, all information either public or private is reflected in stock price so one cannot be generate excess retuns
