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Which of the following types of market efficiency states that only historical prices are reflected in...

Which of the following types of market efficiency states that only historical prices are reflected in stock prices? Select one: a. Weak-form efficiency b. Semi-strong efficiency c. Strong-form effciency

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Answer #1

Answer a. Weak form efficiency

Weak form efficiency states that all the historical price information is already included in the current stock price. Hence, technical analysis would not work here.

Semi-strong form of efficiency states that all public information is already included in stock price. So no fundamental or technical analysis can help you earn higher return. This also encompasses the features and information of weak form efficient markets

Strong form of efficiency states that all information, public and private is included in stock price and there is no way you can earn higher returns. This also encompasses the features and information of weak form and semi-strong efficient markets.

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