Weak Form Efficiency

(redirected from Weak-Form Market 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 ?
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 bias effect is observed in a failure on the part of firms engaging in FFR to achieve weak-form market efficiency. This study tests for this failure in the year prior and the year following the public announcement of FFR for firms accused of fraud by the Securities and Exchange Commission (SEC) during 1998-2002.
For this study, the two alternatives are whether the firm achieved or failed weak-form market efficiency for the Analysis Period under examination.
The runs tests do not support the weak-form market efficiency in 15 of the 18 stocks at 5-percent significance level.