Weak form EMH:

· Security prices reflect all historical information.
· The rates of return on the market should be independent; past rates of return have no effect on future rates.
· technical analysis cannot generate excess returns

Tests:
· Statistical Tests for Independence
· To examine the weak form of the EMH test for the independence assumption that the rate of return on the market are independent.

Example:
Autocorrelation test - security returns are not significantly correlated over times
Runs test- stock price changes are independent over time

Test result: support
The weak-form EMH is supported by the tests and analysis done. Essentially, the weak-form holds that abnormal returns are not achievable with the use of past-historical data as a means to generate returns.

Supported by statistical tests {autocorrelation – security returns are not significantly correlated over times and runs- stock price changes are independent over time}

Trading rule tests that show no excess return can be generated after accounting for transaction costs.(filter rules entail trading stocks when rices move up or down certain amounts).

Other trading rules- show that it does not outperform a buy-&-hold strategy after taking account of commission.