Which of the following statements is (are)true if the strong-form efficient market hypothesis holds?
I.Analysts can easily forecast stock price changes.
II.Financial markets are irrational.
III.Stock returns follow a particular pattern.
IV.Stock prices reflect all available information.
A)I only
B)II only
C)I and III only
D)IV only

Question

Quizplus · Accepted Answer

If the strong-form efficient market hypothesis holds, then all information, both public and private, is already reflected in the stock prices, making it impossible to consistently generate abnormal profits. This means that analysts cannot easily forecast stock price changes, financial markets are not irrational, and stock returns do not follow a particular pattern. Therefore, statement IV only (Stock prices reflect all available information) is true.

Which of the Following Statements Is (Are)true If the Strong-Form