If it proves possible to make abnormal profits based on information regarding past stock prices, then the market:
A)Is weak-form efficient
B)Is not weak-form efficient
C)Is semi-strong-form efficient
D)Is strong-form efficient

Question

Quizplus · Accepted Answer

If abnormal profits can be made based on past stock prices, it suggests that trading based on historical information is profitable and the market is not weak-form efficient. Weak-form efficient market theory states that past trading data, such as stock prices, volumes and other technical and fundamental indicators, already reflects all the available information, making it impossible to earn abnormal profits by trading on this information alone.

If It Proves Possible to Make Abnormal Profits Based on Information