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According to which form(s) of the Efficient Markets Hypothesis will the price of Stock B immediately...

According to which form(s) of the Efficient Markets Hypothesis will the price of Stock B immediately adjust by the correct amount (there is no under- or overreaction), when a brand new piece of information about Stock B becomes public? Choose the best answer below. Select one: The weak form The semi-strong form The strong form The weak and semi-strong forms The weak and strong forms The semi-strong and strong forms The weak, semi-strong, and strong forms

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Answer #1

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

They are 3 levels of Market efficiency:

1. Strong efficiency: Insider information, fundamental analysis and technical analysis are unless in such a market.

2. Semi- Strong: fundamental analysis and technical analysis are unless in such a market.

3. Weak: technical analysis is unless in such a market.

So Strong form of efficiency is insensitive to private information as it takes into consideration the Insider Information. Which renders insider information useless.

Whereas in the case of Semi-strong & Weak. The Insider Information is useful & Markets adjust to the correct amount when Insider Information becomes public.

The answer is: Semi-strong, Weak.

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