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EMH weak form efficient market.

Forums › ACCA Forums › ACCA FM Financial Management Forums › EMH weak form efficient market.

  • This topic has 2 replies, 3 voices, and was last updated 6 months ago by mrjonbain.
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  • December 7, 2021 at 10:07 pm #643002
    abi712003
    • Topics: 10
    • Replies: 1
    • ☆

    Can you explain why this is incorrect.

    In a weak form efficient market, Ring co shareprice reacts to new information the day after it is announced.

    How does weakform react to new information on the same day?

    December 8, 2021 at 7:03 am #643047
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49601
    • ☆☆☆☆☆

    In future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.

    Share prices will react to new information and if it is weak form efficient then it will not happen instantly. However there is no reason why it should happens just one day later – it might happen sooner or more likely might happen later.

    December 9, 2021 at 5:29 am #643336
    mrjonbain
    Moderator
    • Topics: 1
    • Replies: 1216
    • ☆☆☆☆☆

    I think in practice it will depend on nature and volume of current information. For example, if hundreds of thousands of pages of information related to regulatory approval of drug are released it will take time for market participants to assess positive and negative aspects of this for a pharmaceutical company’s share price. Hope this helps.

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