The semistrong form of the efficient market hypothesis states that:
A)all information is reflected in the price of securities.
B)security prices reflect all publicly available information.
C)future prices are predictable.
D)Both A and C.
E)None of the above.

Question

Quizplus · Accepted Answer

The semistrong form of the efficient market hypothesis states that security prices reflect all publicly available information, which means that investors cannot consistently achieve returns above the average market returns by using publicly available information. It does not suggest that future prices are predictable, so option C is incorrect. Option A is incorrect because it implies that all information, not just publicly available information, is reflected in security prices. Option D is incorrect because it includes option C, which is incorrect. Therefore, the best choice is B.

The Semistrong Form of the Efficient Market Hypothesis States That