Given the following situations, determine in each case whether or not the hypothesis of an efficient capital market (semistrong form) is contradicted.
(a) Through the introduction of a complex computer program into the analysis of past stock price changes, a brokerage firm is able to predict price movements well enough to earn a consistent 3% profit, adjusted for risk, above normal market returns.
(b) On the average, investors in the stock market this year are expected to earn a positive return (profit) on their investment. Some investors will earn considerably more than others.
(c) You have discovered that the square root of any given stock price multiplied by the day of the month provides an indication of the direction in price movement of that particular stock with a probability of .7.
(d) A Securities and Exchange Commission (SEC) suit was filed against Texas Gulf Sulphur Company in 1965 because its corporate employees had made unusually high profits on company stock that they had purchased after exploratory drilling had started in Ontario (in 1959) and before stock prices rose dramatically (in 1964) with the announcement of the discovery of large mineral deposits in Ontario.