Strong-form market efficiency states that the market incorporates all information into stock prices. Strong-form efficiency implies that
I.an investor can only earn risk-free rates of return;
II.an investor can always rely on technical analysis;
III.professional investors cannot consistently outperform the market;

Question

Quizplus · Accepted Answer

Strong-form market efficiency implies that even professional investors cannot consistently outperform the market, which means option III is correct. However, it does not mean that an investor can only earn risk-free rates of return (option I) or that an investor can always rely on technical analysis (option II). Therefore, choices A and B are incorrect.

Strong-Form Market Efficiency States That the Market Incorporates All Information