Which of the following statement is NOT a violation of any form of the Efficient Market...
Which of the following statement is NOT a violation of any form of the Efficient Market Hypothesis?
1)A company that beats its earnings forecast this quarter is more likely to beat its earnings forecast again next quarter.
2)A company that generates positive abnormal return today is more likely to generate positive abnormal return tomorrow.
3)A company that beats its earnings forecast this quarter is more likely to generate positive abnormal return tomorrow.
4)None of the above.
Homework Answers
The correct answer is option 3) A company that beats its earnings forecast this quarter is more likely to generate positive abnormal return tomorrow.
This is as per the Efficient Market Hypothesis (EMH). The market will absorb the fact that the company performed better than expected and the same shall be reflected int he prices, resulting in a positive abnormal return. Hence, this is as per EMH and not a violation of it.
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Which of the following statement is NOT a violation of any form
of the Efficient Market...
Which of the following statement is NOT a violation of any form of the Efficient Market Hypothesis?
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