According to the semi-strong form of the EMH,investors who invest in a stock after a highly positive announcement concerning the stock can expect to earn
A)normal return because the stock will be fairly priced when purchased.
B)extraordinary return because the new information will not affect the price until later.
C)extraordinary loss because insiders possess non-public information.
D)zero return because the next price is expected to be the same as the last price.

Question

Quizplus · Accepted Answer

The semi-strong form of the EMH suggests that all publicly available information is already reflected in the stock price, so investors cannot expect to earn extraordinary returns by trading on that information. Instead, they can only earn normal returns, which are consistent with the level of risk associated with the stock. Therefore, investors who invest in a stock after a highly positive announcement can expect to earn normal returns, because the market has already taken that information into account and priced the stock accordingly.

According to the Semi-Strong Form of the EMH,investors Who Invest