Explain whether each of the following is an example of informational efficiency.
a. Every time my broker tells me to buy, the stock price subsequently goes down. Every time my broker tells me to sell, the stock price subsequently goes up.
b. Three months after receiving the financial statements of the Canada Bank, I finally look at them and decide to trade. I rarely make money.
c. I use a simple trading rule: if the stock has risen for the past three days—sell; if the stock has fallen for the past three days—buy. I usually make money.
d. You have been studying the trading behavior of the CEO of the Parchyk Company and find that for the past 10 years, 90 percent of the time the stock rises after the CEO buys and 98 percent of the time the stock falls after the CEO sells stock.
e. I carefully examine the financial statements of the firm, the industry prospects, and general economic conditions. Because of my skill, I am able to complete this analysis within five minutes of the financial statement disclosure. I usually make money.