Question
For each of the following parts, write down the strongest market efficiency concept that you can't rule out with the given information. a)Suppose you find
For each of the following parts, write down the strongest market efficiency concept that you can't rule out with the given information.
a)Suppose you find a data source online that helps you predict the next day's return for a particular stock.
b)A family member of a Genius Pharmaceuticals executive strangely sells all of her shares at the market price in day 1. Without the existence of any news (including the sale) that can affect the stock price in between, the stock trades at a similar price until day 10 when the news arrives that the company's only product was not approved by the FDA. The stock price drops to 0 as the information is revealed to investors.
c)The ABC Company's production plant was destroyed in a fire on June 22nd. The Company's press consultant appears on TV on June 23 stating the exact amount of loss, and adds that the company had no insurance coverage for the assets. After a week without any other news relating the company, wherein the stock price maintained its June 21st value, the stock price of the company plummets on June 27 (you may assume that the markets were open during this period).
d)A friend of yours states that his technical analysis methods, which use past information about the stock prices, work perfectly well and he can know where the stock market is going the next day. Suppose that he is right every day.
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