A lawyer works for a firm that advises corporate firms planning to sue other corporations for antitrust damages.He finds that he can "beat the market" by short-selling the stock of the firm that will be sued.This finding is a violation of the:

Question

Quizplus · Accepted Answer

The lawyer's ability to "beat the market" by short-selling the stock of the firm that will be sued suggests that he has access to information that is not publicly available, which violates the strong form of the efficient market hypothesis. This hypothesis asserts that all information, whether public or private, is already reflected in the stock prices, making it impossible for investors to consistently earn abnormal profits based on private information.

A Lawyer Works for a Firm That Advises Corporate Firms