Chapter 9 • The secondary capital market and its efficiency
likely than not to rise again tomorrow: in other words, there are price trends. Similarly,
there are those who feel that the opposite is true and that a price rise today implies a
fall tomorrow. These attitudes do not, of course, reflect any belief in efficiency.
Figures 9.2, 9.3 and 9.4 depict the scatter of the price movement of one day (t)
plotted against that of the following day (t+1) for a particular security over a period.Figure 9.3
Graph of a
security’s price
on one day (day t)
against that of the
following day (day
t++1) where the
two movements
are negatively
correlated
Figure 9.2
Graph of a
security’s price on
one day (day t)
against that of the
following day (day
t++1) where the two
movements are
positively correlated