The fact that no investor can expect to earn excess returns based on an investment strategy using only historical stock price or return information is an example of ____ market efficiency.

Question

Quizplus · Accepted Answer

This statement reflects weak-form market efficiency, which suggests that past prices or returns do not provide an advantage in predicting future prices or returns. Strong-form efficiency means that all information, including insider information, is already reflected in stock prices, while semi-strong efficiency suggests that all publicly available information is already incorporated into stock prices. Semi-weak efficiency suggests that historical price and return information may provide some limited advantage, but not consistently enough to earn excess returns.

The Fact That No Investor Can Expect to Earn Excess