Question

The form of market efficiency that only relates to whether past market returns are useful in predicting future market returns is ______ form efficiency.

• open

• strong

• semistrong

• weak

• stable

Answer 1

The correct option is weak

Explanation:- Market efficiency refers to the extent to which the current market returns of an asset reflects all available information.

In the weak form of market efficiency the information considered is only the historical market returns of an asset to predict the future market returns. Thus the weak form of market efficiency implies that the current price of an asset reflects its own past prices.