If security markets were truly strong-form efficient,one could never earn a realized return on a stock greater than the marginal investor's expected (and required) rate of return on the stock.

Question

Quizplus · Accepted Answer

In strong-form efficient markets, all information, both public and private, is already reflected in stock prices. However, this does not guarantee that an investor cannot earn a return greater than the marginal investor's expected rate of return, as unexpected events can still cause stock prices to change, providing opportunities for higher returns.

If Security Markets Were Truly Strong-Form Efficient,one Could Never Earn