Question

In regards to the Efficient Market Hypothesis which one of the forms of information could possibly...

In regards to the Efficient Market Hypothesis which one of the forms of information could possibly include insider trading issues?

A. The Strong

B. The Martha Stewart

C. The Weak

D. The Semi Strong

Homework Answers

Answer #1

Insider trading is the form of asymmetry in information

if it is strong efficient market hypothesis then share price reflect all public and private information hence excess returns can not be earned.

In semi strong efficient market hypothesis share price reflects only publicly available information and in weak market hypothesis no information could be helpful to predict the prices

Hence only semi strong market hypothesis provides upper edge if an investor is with private information and that is insider trading

Hence option D is correct

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
As regards the Efficient Market Hypothesis (EMH) in its three forms (weak, semi-strong and strong) assign...
As regards the Efficient Market Hypothesis (EMH) in its three forms (weak, semi-strong and strong) assign a form to each example below: Stock price is based on all information private and public. _______ It is of no use to perform a technical analysis (which is stock price prediction based exclusively on past trading data,) in selecting a stock. ______ It is useless for us to analyse a stock based on publicly available information. _______ The most valid form of the...
A market in which insider trading do not exist is __________. Multiple Choice Systematically efficient. Completely...
A market in which insider trading do not exist is __________. Multiple Choice Systematically efficient. Completely efficient. Semi-strong from efficient. Weak form efficient. Strong form efficient.
According to which form(s) of the Efficient Markets Hypothesis will the price of Stock B immediately...
According to which form(s) of the Efficient Markets Hypothesis will the price of Stock B immediately adjust by the correct amount (there is no under- or overreaction), when a brand new piece of information about Stock B becomes public? Choose the best answer below. Select one: The weak form The semi-strong form The strong form The weak and semi-strong forms The weak and strong forms The semi-strong and strong forms The weak, semi-strong, and strong forms
) Which of the following causes a market to be weak-form efficient? Select one: a. Investors...
) Which of the following causes a market to be weak-form efficient? Select one: a. Investors analysing past prices and buying shares they think are more likely to increase than decrease, pushing prices up until the share price reflects any information contained in the pattern of past prices. b. Investors analysing past prices and selling shares they think are more likely to decrease than increase, pushing prices down until the share price reflects any information contained in the pattern of...
1a.According to the semi-strong form of the efficient market hypothesis: A. Private information is of no...
1a.According to the semi-strong form of the efficient market hypothesis: A. Private information is of no help in earning abnormally high returns. B. Using past price and volume information, one can earn abnormally high returns from stocks. C. Using insider information, one can earn abnormally high returns from stocks. D. Financial statement analysis cannot be used to earn abnormally high returns from stocks. E. Equity Analysts are always correct in predicting the best stocks. 1b. The duration of a 270-day...
Galleon Group, a hedge fund managing $7 billion in assets was consistently outperforming the market. The...
Galleon Group, a hedge fund managing $7 billion in assets was consistently outperforming the market. The reason for success was that the manager of Galleon took advantage of the insider information leakages from former MBA classmates. Later the manager of Galleon was found guilty of insider trading and was sentenced for eleven years in prison. The fact that Galleon was consistently outperforming the market implies that: a) Market is not efficient in the weak form b) Market is not efficient...
For each of the following kinds of information, indicate which form of the efficient markets hypothesis...
For each of the following kinds of information, indicate which form of the efficient markets hypothesis is supported if that information is reflected in security prices: a. Government released data on the money supply; b. A corporate quarterly earnings report; c. A public release of information from the Securities and Exchange Commission on insider trading; d. Confidential discussion of a corporate board of directors on dividend policy; e. A history of a bond’s prices.
Which of the following statements is most correct? If a market is strong-form efficient this implies...
Which of the following statements is most correct? If a market is strong-form efficient this implies that the returns on bonds and stocks should be identical. If a market is weak-form efficient this implies that all public information is rapidly incorporated into market prices. If a market is semi-strong weak-form efficient this implies that all private information is rapidly incorporated into market prices. None of the above statements is correct.
Which of the following statements is correct? A. If a market is weak-form efficient, it is...
Which of the following statements is correct? A. If a market is weak-form efficient, it is also semistrong- and strong-form efficient. B. If a market is semistrong-form efficient, it is also strong-form efficient. C. If a market is strong-form efficient, it is also semistrong- but not weak-form efficient. D. If a market is strong-form efficient, it is also semistrong- and weak-form efficient.
Which of the following actions will least likely strengthen a strong‐form efficient market? Group of answer...
Which of the following actions will least likely strengthen a strong‐form efficient market? Group of answer choices Strong prohibitions on insider trading. Permitting short‐selling transactions. Opening the market for foreign investors.