Question

Your friend Judy has gone to work for the CDZ. Every day you call her at 2:30 PM and get an early forecast of what the new coronavirus numbers (which are released at 6) are expected to be. If you can make abnormal trading returns based on the information that Judy gives you, does this violate market efficiency?

Yes, this violates weak efficiency.

Yes, this violates semi-strong efficiency.

Yes, this violates strong efficiency.

No, this does not violate market efficiency.

Answer 1

This is an example of having access to insider information and such insider information are not reflected into the price because the moment they come out, there is an excess rate of return made by those who are having those informations.

So, In semi-strong form of market, these insider informations are not discounted and only publicly available information have been discounted so this is a violation of strong form of market because in a strong market all the publicly available information and privately valuable information or discounted.

Correct answer will be option (C) yes, it violates strong efficiency