A university professor is researching the impact of non-public information on the marketplace.She finds that investors who do have access to material, non-public information are consistently earning above-average risk-adjusted returns, and that the market price of the targeted securities are partially reflecting the new information.This is a violation of:
I.Strong form market efficiency
II.Semi-strong market efficiency
III.Weak form market efficiency
A)I only
B)I and II
C)I and III
D)II and III

Question

Quizplus · Accepted Answer

This scenario violates strong form market efficiency, which posits that all information, public and private, is already reflected in stock prices, meaning no one can consistently achieve higher returns.

A University Professor Is Researching the Impact of Non-Public Information