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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

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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

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