Describe the three forms of market efficiency
What will be an ideal response?
Answer: WEAK-FORM MARKET EFFICIENCY: In weak-form efficient markets, current prices reflect the price history and trading volume of the stock. It is of no use to chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market.
SEMI-STRONG-FORM MARKET EFFICIENCY: In semi-strong-form efficient markets, current prices already reflect the price history and volume of the stock, as well as all available public information. It is therefore of no use to try to exploit publicly available news or financial statement information to routinely outperform the market.
STRONG-FORM MARKET EFFICIENCY: In strong-form efficient markets, current prices reflect the price and volume history of the stock, all publicly available information, and all private information. All information is already embedded in the price, and there is no advantage even to insiders who might wish to exploit their private information.
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Marriott used which of the following management science techniques to help improve profit by $120 million over two years?
A) optimization, decision analysis, and forecasting B) forecasting, queuing theory, and inventory analysis C) queuing theory, optimization, and inventory analysis D) forecasting, simulation, and optimization
A recommended strategy for overcoming a rumor is to
a. threaten to punish the originators of the rumor. b. communicate the information the people want. c. start a counter-rumor. d. deny that the rumor has any merit.