The semistrong form of the efficient market hypothesis states that:
A)security prices reflect all publicly available information.
B)all information is reflected in the price of securities.
C)future prices are predictable.
D)Both A and C.
E)None of the above

Question

Quizplus · Accepted Answer

The semistrong form of the efficient market hypothesis states that security prices reflect all publicly available information, which means that all known information about a security is already priced in, and it is not possible to earn abnormal returns by trading based on that information. It also implies that insider trading, or trading based on non-public information, is not possible because that information would quickly be reflected in the stock price once it becomes public. The semistrong form does not imply that future prices are predictable.

The Semistrong Form of the Efficient Market Hypothesis States That