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How many of the following statements are true if is analysis involves analyzing publicly available company financial statements, government data, and industry reports and tempting to identify stocks of firms that are undervalued? Statement 1. There could be predictable benefits from K's analysis in markets that are not efficient Matement 2: There could be predictable benefits from K's analysis in markets that are weak form efficient. Sant 3 There could be predictable benefits from K's analysis in markets that are semi-strong form efficient Stars 4 There could be predictable benefits from Ks analysis in markets that are strong form efficient ? a. 1 b.2 c.3 d.4 e.5

1 Answer

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The correct answer is **c. 3**. There could be predictable benefits from K's analysis in markets that are semi-strong form efficient.

Statement 1: There could be predictable benefits from K's analysis in markets that are not efficient.

This statement is true because in inefficient markets, where stock prices may not fully reflect all available information, there is a possibility of identifying undervalued stocks through analysis of publicly available company financial statements, government data, and industry reports.

Statement 2: There could be predictable benefits from K's analysis in markets that are weak form efficient.

This statement is false. In weak form efficient markets, all past market information is already reflected in stock prices, making it difficult to consistently identify undervalued stocks through analysis of historical data alone.

Statement 3: There could be predictable benefits from K's analysis in markets that are semi-strong form efficient.

This statement is true. In semi-strong form efficient markets, stock prices reflect all publicly available information. However, by conducting analysis on company financial statements, government data, and industry reports, it is possible to gain an informational advantage and potentially identify undervalued stocks before the market fully incorporates the information.

Statement 4: There could be predictable benefits from K's analysis in markets that are strong form efficient.

This statement is false. In strong form efficient markets, stock prices already reflect all information, including public and private information. Therefore, it is unlikely to consistently gain predictable benefits from analysis alone.

Based on the analysis above, statements 1, 3, and 4 are true. Therefore, option c is the correct answer.

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User Awais Fayyaz
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