Which of the following observations provides evidence against strong-form market efficiency?
A) Some mutual funds outperformed the market in 1997.
B) Managers trading in their own stock obtain superior returns.
C) You cannot make superior profits by trading stocks after earnings reports are issued.
D) Stock prices follow a random walk.

Question

Quizplus · Accepted Answer

The observation that managers trading in their own stock obtain superior returns indicates that insiders have access to information that the market does not have, which contradicts the idea of strong-form market efficiency.

Which of the Following Observations Provides Evidence Against Strong-Form Market