Which of the following statements is (are) correct?
A) If a market is weak-form efficient, it is also semistrong- and strong-form efficient.
B) If a market is semistrong-form efficient, it is also strong-form efficient.
C) If a market is strong-form efficient, it is also semistrong- but not weak-form efficient.
D) If a market is strong-form efficient, it is also semistrong- and weak-form efficient.

Question

Quizplus · Accepted Answer

In the hierarchy of market efficiency, strong-form efficiency includes semistrong- and weak-form efficiencies. This means that if a market is strong-form efficient, all public and private (insider) information is already reflected in stock prices, which also implies that the market is semistrong- (all public information is reflected in stock prices) and weak-form efficient (all past trading information is reflected in stock prices).

Which of the Following Statements Is (Are) Correct