Question

Which of the following are consistent with the efficient markets hypothesis? Check all that apply. You should spend several hours a day studying the business section of your local newspaper to determine which stocks to add to your investment portfolio. O Stock markets reflect all available information about the value of stocks O Changes in stock prices are impossible to predict.

Answer 1

1. Stock markets reflect all available information about the value of stocks AND

2. Changes in stock prices are impossible to predict.

Step-by-step explanation:

The characteristics that are consistent with the efficient markets hypothesis are that

1. Stock markets reflect all available information about the value of stocks

By definition efficient markets are those whose asset prices reflect all available information.

2. Changes in stock prices are impossible to predict.

The efficient market hypothesis has been described as a backbreaker for forecasters. In its crudest form it effectively says that the returns from speculative assets, are unforecastable.