1.Weak Form Market Efficiency Security prices reflect all information found in past prices and volume. If the weak form of market efficiency holds,then technical analysis is of no value. Often weak-form efficiency is represented as P=P1+Expected return random errort Since stock prices only respond to new information,which by definition arrives randomly, stock prices are said to follow a random walk. 1111 1.Weak Form Market Efficiency 1.Weak Form Market Efficiency ƒ Security prices reflect all information found in past prices and volume. ƒ If the weak form of market efficiency holds, then technical analysis is of no value. ƒ Often weak-form efficiency is represented as Pt = Pt-1 + Expected return + random error t ƒ Since stock prices only respond to new information, which by definition arrives randomly, stock prices are said to follow a random walk