Which of the following statements is most correct?
A) If a market is strong-form efficient this implies that the returns on bonds and stocks should be identical.
B) If a market is weak-form efficient this implies that all public information is rapidly incorporated into market prices.
C) If your uncle earns a return higher than the overall stock market, this means the stock market is inefficient.
D) Both answers a and b are correct.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

In a strong-form efficient market, all information (public and private) is reflected in stock prices, but this does not imply identical returns for bonds and stocks. Weak-form efficiency only suggests that past price information is reflected in prices, not all public information. An individual earning higher returns than the market does not necessarily indicate market inefficiency.

Which of the Following Statements Is Most Correct