An example that specifically contradicts strong-form market efficiency in U.S.stock markets is that:
A) excess profits are observed in cases of insider trading.
B) stock prices follow predictable patterns in each month.
C) random-walk behavior is reliable.
D) fundamental analysts outperform the S&P 500.

Question

Quizplus · Accepted Answer

The observation of excess profits in cases of insider trading is a violation of strong-form market efficiency, which suggests that all information, including insider information, is already reflected in stock prices. If insider trading can lead to excess profits, it implies that the market is inefficient, and some participants have an unfair advantage over others.

An Example That Specifically Contradicts Strong-Form Market Efficiency in U