Which of the following are consistent with the efficient market
hypothesis? Check all that apply.
1) Changes in stock prices can be accurately predicted by
2) The stock market is informativonally efficient.
3) At the market price, the number of people who believe the
stock is overvalued exactly equals the number of people who think
the stock is undervalued.
Some investors cite the existence of anomalies – observations that do not fit the model – as evidence that stock markets are no efficient. Which of the following are such anomalies? Check all that apply 1) Firms that pay high dividends yield lower returns than firms that pay low dividends. 2) Stock prices jump the moment firms announce changes in their earnings. 3) Stock prices do not change much when firms annouce changes in their earnings. 4) Returns are lower over a weekend.