The fact that superior returns can not be made by selling stocks that cut dividends is evidence of:
A) weak-form efficiency.
B) semi-strong-form efficiency.
C) strong-form efficiency.

Question

Quizplus · Accepted Answer

The fact that superior returns cannot be made by selling stocks that cut dividends is evidence of semi-strong-form efficiency. This form of market efficiency suggests that all publicly available information is already reflected in stock prices, including dividend announcements. Therefore, investors cannot achieve superior returns through trading on such information.

The Fact That Superior Returns Can Not Be Made by Selling