Question

Which of the following situations implies that the capital market likely achieves the strong form of...

Which of the following situations implies that the capital market likely achieves the strong form of market efficiency?

Group of answer choices

Share price incorporates the information in a firm's' annual report quickly after the report is released.

Share price incorporates the information in a firm's' annual report gradually after the report is released.

Firm managers bought their own firms' shares and the share prices incorporated the information conveyed by insider trading immediately.

Firm managers bought their own firms' shares and the share prices incorporated the information conveyed by insider trading after public announcement of the insider trading.

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Answer #1

Strong form of market efficiency will be advocating that all the privately available information and the publicly available information has been discounted into the stock price and there will not be any scope for making any additional rate of return then the market

Hence, firm manager when they will be buying their own shares and share price will be incorporating these informations conveyed by these insider trading immediately in the the market because there is these are kind of private information and they are incorporated immediately in strong form of market.

Correct answer is option (C)firm managers bought their own firm share and the share price incorporated the information conveyed by insider trading immediately

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