When a firm makes an earnings announcement that is different than what the analysts expected the market price of the firm's stock adjusts immediately.This is evidence consistent with markets being ____ efficient but not ____ efficient.

Question

Quizplus · Accepted Answer

This scenario is evidence of semistrong-form efficiency, where all publicly available information (such as earnings announcements) is already reflected in stock prices. However, it does not support strong-form efficiency, which posits that all information, public and private, is reflected in stock prices.

When a Firm Makes an Earnings Announcement That Is Different