Which of the Following Statements Best Describes Market Efficiency

question 3

Multiple Choice

Which of the following statements best describes market efficiency?

• A) Semistrong-form market efficiency implies that as soon as any public or private information comes into being it is incorporated into stock prices.
• B) Weak-form market efficiency implies that recent trends in stock prices are of no use in predicting future stock prices.
• C) Market efficiency implies that all stocks should have the same expected return.
• D) According to strong-form market efficiency, insiders would find it possible to consistently earn abnormal returns in the stock market even if they have superior knowledge about the company.

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Definitions:

Nature

The physical world and everything in it that is not made by humans, including plants, animals, landscapes, and other features or products of the earth.

Organization

An arranged and structured collective of people with a particular purpose, such as a business or government department.

Public Service Motivation

The inclination or desire to contribute to the well-being of society through work in the public sector or through voluntary service.

Goal Theories

Theories that focus on how setting goals influences behavior and outcomes.