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 ?
According to the weak-form efficiency current foreign exchange rates reflect information available in past exchange rates.
Weak-form efficiency in the Nigerian Stock Exchange.
In order to test the weak-form efficiency of the Romanian capital market and different aspects regarding the behavior of financial assets, we have used daily closing prices for the BET Index, for the period starting from the 22th of September, 1997, and ending to the 10th of July, 2015.
Emerging markets also exhibited weak-form efficiency.
This is a condition required for a set of survey expectational series to meet the term of weak-form efficiency.
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).
Weak-Form Efficiency when prices reflect all information contained in past trading,
Pakistan's equity market being an emerging market, it seems appropriate to test for weak-form efficiency.
Weak-form efficiency uses the information in past stock prices to form portfolios of the assets.
However, the fact that one recognizes the existence of a pattern in the NYSE large-firm portfolio raises questions about the weak-form efficiency of this market.
This paper provides a summary of results from tests of weak-form efficiency and a partial-equilibrium model to identify the determinants of black market exchange rates.