Equity Investments - Equity Investments Section 1
- Option : A
- Explanation : Market efficiency can be impeded by reduction in number of market
participants which also leads to market imperfections.
- Option : B
- Explanation : Restrictions on short selling in some markets impede efficiency. Reducing the restrictions on short selling will allow for more arbitrage trading. Arbitrage results in higher efficiency as price differences quickly disappear.
63. Market efficiency will most likely increase by:
- Option : C
- Explanation : If the number of financial market participants increase, markets become more efficient.
64. The weak form market efficiency most likely assumes that current security prices:
- Option : C
- Explanation : In the weak form efficient market hypothesis, security prices fully reflect all price and trading volume information.
65. Security markets are not strong-form efficient because:
- Option : C
- Explanation : Securities markets are not strong-form market efficient as regulations try to prevent insider trading.
