With Strong-Form Market Efficiency

question 28

Multiple Choice

With strong-form market efficiency:

• A) the price of a security in the market reflects all public information only.
• B) it would not be possible to earn abnormally high returns by trading on private information.
• C) investors who have access to inside or private information will be able to earn abnormal returns.
• D) None of the above.

---

Definitions:

Expected Value

The weighted average of all possible values that a random variable can take on, weighted by the probabilities of those values.

Payoffs

The outcomes or returns of a decision or action, often expressed in terms of profit or loss.

Risky Undertaking

An action or venture involving a high degree of uncertainty and potential for loss or failure.

Net Profit

The amount of money that remains from revenues after all expenses, taxes, and costs have been subtracted.