If it proves possible to make abnormal profits based on information regarding past stock prices,then the market:
A) is weak-form efficient.
B) is not weak-form efficient.
C) is semistrong-form efficient.
D) is strong-form efficient.

Question

Quizplus · Accepted Answer

If abnormal profits can be made based on past stock prices, it indicates that the market is not weak-form efficient, as weak-form efficiency implies that past prices are already incorporated in the current prices and cannot be used to earn abnormal profits. However, it does not necessarily imply that the market is not semi-strong or strong-form efficient.

If It Proves Possible to Make Abnormal Profits Based on Information