Weak-form efficiency

Weak-form efficiency

A pricing theory that the price of a security reflects the past price and trading history of the security. Theory implies that security prices follow a random walk. Related: Semistrong-form efficiency, strong-form efficiency.

Weak Form Efficiency

A version of the efficient markets theory on how markets work. It holds that the market efficiently deals with most information on a given security and reflects it in the price immediately. Specifically, weak form efficiency states that technical analysis is ineffective and that prices are on a random walk. Investors and academics disagree on how well the model works, but it is less controversial than the semi-strong form of the EMT and the strong form of the EMT.
References in periodicals archive ?
Emerging markets also exhibited weak-form efficiency.
Moreover, a more recent research of Elango and Hussein (2008) has shown by virtue of runs test that the stock markets of Kuwait, Saudi Arabia, UAE, Oman, Qatar, and Bahrain (GCC Countries) the weak-form efficiency could be rejected for all GCC markets from 2001 to 2006.
This is a condition required for a set of survey expectational series to meet the term of weak-form efficiency.
Similar to the test of lack of serial correlation, the result of weak-form efficiency testing was drawn on the basis of the F-statistic up to four lagged past actual values, and this is reported in Table 3 as well.
Analysis of Weak-Form Efficiency on the Nigerian Stock Market: Further Evidence from GARCH Model.
Weak-form efficiency occurs when past stock prices cannot be used to predict future stock prices (Magnusson and Wydick, 2002).
If a significant difference between the samples is present, then the use of weak-form efficiency testing to identify fraud firms before the revelation of FFR is possible.
Pakistan's equity market being an emerging market, it seems appropriate to test for weak-form efficiency.
Unsurprisingly, we find that very rarely do lotto games offer a positive net expected return, thus meeting the requirements of weak-form efficiency.
The next section provides an overview of random walk model and its implication on weak-form efficiency test.
To test the random walk hypothesis and weak-form efficiency of UAE stock market, the paper conducted the following steps:
For 1,500 daily observations, our test results imply weak-form efficiency of the S&P 500 Index.