Question

19) According to the efficient market hypothesis,

a) Fundamental analysis that generates POSITIVE alpha violates STRONG form efficiency.

b) Fundamental analysis that generates POSITIVE alpha violates WEAK form efficiency.

c) Fundamental analysis that generates POSITIVE alpha violates SEMI-STRONG form efficiency.

d) Both a) and c) are correct.

e) Both b) and c) are correct.

Answer 1

Option E is correct

In short term, fundamental analysis can generate alpha in weak for efficient markets, but in semi-strong and strong form efficient markets, fundamental analysis cannot generate alpha.