Suppose that research shows that by buying stocks issued by companies whose names begin with the letter G investors can earn above-normal returns in even-numbered years. a. From the perspective of the efficient markets hypothesis, this is further evidence that the hypothesis is correct. b. this would be considered evidence that the hypothesis is incorrect. c. investors must have insider information on these companies. d. purchasers of these stocks must have been speculators.

Question

Business

Louis Watson

3 January, 09:33

Suppose that research shows that by buying stocks issued by companies whose names begin with the letter G investors can earn above-normal returns in even-numbered years. a. From the perspective of the efficient markets hypothesis, this is further evidence that the hypothesis is correct. b. this would be considered evidence that the hypothesis is incorrect. c. investors must have insider information on these companies. d. purchasers of these stocks must have been speculators.

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Abbie · Answer 1

d. purchasers of these stocks must have been speculators

Explanation:

When it comes to "financial economics," a speculator refers to somebody who takes big risks in the hope of making a profit. They are not considered gamblers because they are looking for patterns that are repetitive in order to assess the rise and fall of prices.

In the situation above, the purchasers of the stocks must have been speculators because they have studied the pattern according to research. The repeated pattern of buying stocks issued by companies whose names begin with the letter G investors have been shown to earn normal returns in even-numbered years. Knowing this information will cause a demand on the stocks by the purchasers.

Thus, this explains the answer.