Question

Joe bought a stock at $57 per share. The price promptly fell to $55. Joe held on to the stock until it again reached $57, and then he sold it once he had eliminated his loss. If other investors do the same to establish a trading pattern, this would contradict _______. Multiple Choice the strong-form EMH the semistrong-form EMH technical analysis the weak-form EMH

Answer 1

Weak-form EMH


Step-by-step explanation:
Weak form efficiency is also called The random walk theory States that past volume, Price movements and earnings do not affect the Price of a stock and cannot be used to forecast it’s future directions. Weak form efficiency States that prices of future securities Are random and not determined by past events and that there is no relationship between past information in current market prices.


The principle of weak form efficiency has been contradicted because other investors are making use of Joe’s past information to create a trading pattern.



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