Assuming that markets are semistrong efficient,which of the following statements is correct?

Question

Quizplus · Accepted Answer

If markets are semistrong efficient, all publicly available information including past stock prices, should be reflected in the current market price. Therefore, it is difficult to consistently beat the market using this information. According to the SML, an investor should expect to earn a return that compensates for the level of risk they are taking. Any returns earned above this level would be due to luck or access to private information. Therefore, the most likely returns for an investor are those predicted by the SML, but it is unlikely that they will consistently earn returns above this level without an information advantage. Option A and D are incorrect because not all stocks have the same expected return and investors should not expect to consistently earn returns above what is predicted by the SML. Option B is incorrect because past prices should already be reflected in the current price.

Assuming That Markets Are Semistrong Efficient,which of the Following Statements