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quester [9]
3 years ago
8

If the stock market is semistrong-form efficient, which of the following statements would be CORRECT? a. Even if a market is sem

istrong-form efficient, an investor could still earn a better return than the market return if he or she had inside information. b. A trading strategy in which you buy stocks that have recently fallen in price is likely to provide you with a return that exceeds the return on the overall stock market. c. The required returns on stocks equal the required returns on bonds. d. If you have insider information about a particular stock, you cannot expect to earn an above average return on this information because it is already incorporated into the current stock price. e. The required returns on all stocks are the same, and the required returns on stocks are higher than the required returns on bonds.
Business
1 answer:
Aleksandr-060686 [28]3 years ago
5 0

Answer:

The correct answer is letter "A": Even if a market is semi-strong-form efficient, an investor could still earn a better return than the market return if he or she had inside information.

Explanation:

The semi-strong efficiency of the market is part of the Efficiency Market Hypothesis (EMH) that states <em>changes in stock prices can be predicted as the result of all available information provided to investors</em> instead of using fundamental or technical analysis. Thus, "beating the market" could be a matter of chance and not skill.

Then, <em>investors could still beat a semi-strong-form efficient market compared to a market in which investors could obtain (somehow) insider information.</em>

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