Suppose that over the last 10 to 15 years significantly large numbers of investors have been able to earn abnormal returns from using the firm's publicly available financial information to forecast growth in earnings and dividends. This would be evidence that the markets are not
I. weak form efficient.
II. semi-strong form efficient.
III. strong form efficient.

Question

Quizplus · Accepted Answer

The ability of investors to earn abnormal returns using publicly available financial information suggests that the market is not semi-strong form efficient, as this form of efficiency posits that all public information is already reflected in stock prices. It also implies that the market is not weak form efficient, which states that past trading information is reflected in stock prices. However, it does not necessarily imply anything about strong form efficiency, which deals with all information, both public and private, being reflected in stock prices.

Suppose That Over the Last 10 to 15 Years Significantly