Final answer:
a) Nearly half of all professional managed mutual funds outperforming the S&P500 would be inconsistent with the efficient market hypothesis. b) Money managers that outperform in one year likely outperforming in the following year would also violate the hypothesis. c) Stock returns predictably higher in January than other months and d) stocks performing well in one week performing poorly in the following week would both be violations of the efficient market hypothesis.
Step-by-step explanation:
a) Nearly half of all professional managed mutual funds are able to outperform the S&P500 in a typical year. This would be inconsistent with the efficient market hypothesis, which states that all available information is already reflected in stock prices, making it difficult for investors to consistently outperform the market average.
b) If money managers that outperform the market in one year are likely to outperform in the following year, it would also be inconsistent with the efficient market hypothesis. According to the hypothesis, stock prices follow a random walk and past performance does not guarantee future success.
c) If stock returns tend to be predictably higher in January than in other months, it would be a violation of the efficient market hypothesis. The hypothesis assumes that stock prices already reflect all available information, so any predictable patterns in stock returns would suggest that the market is not efficient.
d) If stocks that perform well in one week perform poorly in the following week, it would also be a violation of the efficient market hypothesis. The hypothesis assumes that stock prices follow a random walk and past performance is not indicative of future performance.