Weak Form Efficiency

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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.
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References in periodicals archive ?
Weak-form market efficiency of an emerging market: Evidence from Dhaka stock market of Bangladesh.
Testing weak-form market efficiency in emerging market: Evidence from Botswana Stock Exchange.
Weak-form Market Efficiency and Calendar anomalies for Eastern Europe Equit Markets.
A weak-form market efficiency test can be reduced to testing hypothesis that [phi] is equal zero in the regression(8), where [X.sub.t] contains only the lagged forward rate forecast errors.
This implies that historical returns are not useful for predicting future returns, which is consistent with weak-form market efficiency.
The runs tests do not support the weak-form market efficiency in 15 of the 18 stocks at 5-percent significance level.