Homework Answers
efficient market hypothesis:
security prices already reflect all the available information.
They are 3 levels of Market efficiency:
1. Strong efficiency: Insider information, fundamental analysis and
technical analysis are unless in such a market.
2. Semi- Strong: fundamental analysis and technical analysis are
unless in such a market.
3. Weak: technical analysis is unless in such a
market.
Efficient market approach says that past price movement, earnings report and volume traded doesn't affect stocks Current price and can't be used to predict the stocks future directions.
In simple words, past performance doesn't guarantee the future performance of the stock price moment. This is because all the available information is already taken into consideration.
So the efficient market approach is a forecast backbreaker/poor forecaster not because of simple forecast models but due to Well-functioning financial markets.
Answer: False
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The efficient markets hypothesis
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