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:

Stakeholders

Individuals, groups, or organizations that have an interest or concern in a business and can affect or be affected by the business's actions.

Ethical Dilemmas

Complex situations where individuals must choose between two or more conflicting moral principles, making it difficult to decide the right course of action.

Raw Materials

The basic substances or components that are processed to manufacture finished goods or are incorporated into the production process.