Chapter 7 Flashcards
The hypothesis stating that, as a practical matter, investors cannot consistently “beat the market”
Efficient Markets Hypothesis (EMH)
A return in excess of that earned by other investments having the same risk
Excess Return
No discernible pattern to the path that a stock price follows through time
Random Walk
A research method designed to help study the effects of news on stock prices
Event Study
The remaining return on a stock after overall market returns have been removed
Abnormal Returns
An investor who makes a buy or sell decision based on public information and analysis
Informed Trader
Private knowledge that can substantially influence the share price of a stock
Material Nonpublic Information
The tendency for Monday to have a negative average return
Day-Of-The-Week Effect
Tendency for small stocks to have large returns in January
January Effect
A situation where observed prices soar far higher than fundamentals and rational analysis would suggest
Bubble
A situation where market prices collapse significantly and suddenly
Crash
Rules that kick in to slow or stop trading when the DJIA declines by more than a preset amount in a trading session
NYSE Circuit Breakers
