Q5. Which of the following is least likely an assumption behind the semistrong-form of the efficient market hypothesis (EMH)?

A)   The timing of news announcements are independent of each other.

B)   A large number of profit-maximizing participants.

C)   All information is cost-free and available to everyone at the same time.

Q6. The strong-form EMH goes beyond the semistrong-form in that it calls for:

A)   cost free availability of all information, both public and private.

B)   all non-market public information should be incorporated into security prices.

C)   a large number of profit maximizing participants.

Q7. Which of the following forms of the EMH assumes that no group of investors has monopolistic access to relevant information?

A)   Both weak and semistrong form.

B)   Weak-form.

C)   Strong-form.

Q8. The reaction of stock prices to the announcement of a stock split is covered by which form of the efficient market hypothesis (EMH)?

A)   Semistrong.

B)   Weak.

C)   Strong.

Q9. The semi-strong form of the efficient market hypothesis (EMH) asserts that stock prices:

A)   fully reflect all publicly available information.

B)   fully reflect all historical price information.

C)   fully reflect all relevant information including insider information.

Q5. Which of the following is least likely an assumption behind the semistrong-form of the efficient market hypothesis (EMH)?fficeffice" />

A)   The timing of news announcements are independent of each other.

B)   A large number of profit-maximizing participants.

C)   All information is cost-free and available to everyone at the same time.

Correct answer is C)        

The strong-form EMH assumes all information, both public and private, is cost-free and available to all investors at the same time.

Q6. The strong-form EMH goes beyond the semistrong-form in that it calls for:

A)   cost free availability of all information, both public and private.

B)   all non-market public information should be incorporated into security prices.

C)   a large number of profit maximizing participants.

Correct answer is A)

The strong-form assumes perfect markets in which all information, both public and private, is cost free and available to everyone at the same time.

Q7. Which of the following forms of the EMH assumes that no group of investors has monopolistic access to relevant information?

A)   Both weak and semistrong form.

B)   Weak-form.

C)   Strong-form.

Correct answer is C)

The strong-form EMH assumes that stock prices fully reflect all information from public and private sources. In addition, no group of investors has monopolistic access to information relevant to the formation of prices.

Q8. The reaction of stock prices to the announcement of a stock split is covered by which form of the efficient market hypothesis (EMH)?

A)   Semistrong.

B)   Weak.

C)   Strong.

Correct answer is A)

The semistrong form of the EMH asserts that security prices fully reflect all publicly available information. Announcement type information such as that related to stock splits is an example of publicly available information.

Q9. The semi-strong form of the efficient market hypothesis (EMH) asserts that stock prices:

A)   fully reflect all publicly available information.

B)   fully reflect all historical price information.

C)   fully reflect all relevant information including insider information.

Correct answer is A)

The semi-strong form of the EMH asserts that security prices fully reflect all publicly available information. This would include all historical information. The weak form relates to historical information only. The strong form relates to public and private information.

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