Which of the following will lead to abnormal profits in a semistrong form efficient market?
I. private financial information
II. historical price trends
III. financial analysts reports
IV. unreleased merger plans
A)I only
B)I and IV only
C)II and III only
D)I, II, and III only
E)I, III, and IV only

Question

Quizplus · Accepted Answer

According to semi-strong form efficiency, all publicly available information is already reflected in the current market price. Therefore, only private financial information and unreleased merger plans (which are not yet public) can lead to abnormal profits. Historical price trends and financial analysts reports are both publicly available information and therefore, will not lead to abnormal profits in a semi-strong form efficient market.

Which of the Following Will Lead to Abnormal Profits in a Semistrong