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what is the form of market hypothesis (strong, semi strong or weak) when there is an...

what is the form of market hypothesis (strong, semi strong or weak) when there is an company announcement of having a positive profit for the 1st half but having a fall in its stock price the next few days, followed a drastic drop in price after 1 week?

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Answer #1

This is the Semi Strong form of market hypothesis.

My reaasoning for this goes as:

1. In this form of market hypothesis, all types of public information is reflected in stock prices. Herein, announcement of making profits.

2. However, market will quickly absorb this information by reflecting on stock prices fluactuations (falling stock prices in this question)

3. The changes in demand & supply of stocks incorporates additonal public information in the market.

Hope this answers.

Feel free to dicuss/comment in case of confusion.

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