The strong form of the efficient market hypothesis states that:
A) security prices reflect all publicly available information.
B) major market events can be predicted using publicly available information.
C) insider information contains no special advantage.
D) future prices are predictable.

Question

Quizplus · Accepted Answer

The strong form of the efficient market hypothesis posits that all information, both public and private (or insider information), is already reflected in stock prices. Therefore, no one can consistently achieve higher returns on a risk-adjusted basis by using any information, including insider information, because it contains no special advantage that is not already priced into the market.

The Strong Form of the Efficient Market Hypothesis States That