Lets assume we consider data on a groups of companies of similar investment risk. It was stated in class that under the weak form of EMH, the movement of price of a stock i is a random walk: where is the same for all stocks in the group and is independent of, and cannot be predicted by, past prices.
Consider the following equation: where is the same across the group and and is independent of past prices. Which equation you think reflects the Weak Form EMH better? Explain briefly.
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Lets assume we consider data on a groups of companies of similar investment risk. It was stated in class that under the weak form of EMH, the movement of price of a stock i is a random walk: where is the same for all stocks in the group and is independent of, and cannot be predicted by, past prices.
Consider the following equation: where is ...
Solution Summary
Weak Form EMH is discussed. The investment risks for companies are discussed.
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