Hi All,
This question has been discussed last year but what I gather from the thread (filed under Section 13 like this one) it was not clarified (or at least not for me).
Question: if some occurence contradicts semi-strong form market does it contradict weak form as well?
Or does it contradict strong form as well?
Thx in advance.
Strong form (SF) says that you cannot earn long-term, above-average, risk-adjusted returns with any information, public or private. Semi-strong form (SSF) says that you cannot earn long-term, above-average, risk-adjusted returns with public information. Weak form (WF) says that you cannot earn long-term, above-average, risk-adjusted returns with public, trading (price and volume) information. Because public or private information includes public information, and public information includes public trading information, we have:
SF => SSF => WF.
From Aristotelian logic, we know that a statement and its contrapositive are logically equivalent:
(A => B) <=> (~B => ~A).
Therefore,
~WF => ~SSF => ~SF.
If data contradict weak form, then they contradict semi-strong form. If data contradict semi-strong form, they contradict strong form.
Thank you very much S2000. The signs >= make it even more plausible.
This was the thread from last year I was referring to btw. I still hope the initial question & answer provided in te CFA mock was incorrect.
http://www.analystforum.com/forums/cfa-forums/cfa-level-i-forum/91322155
You’re welcome.
Whatever helps you remember it; I love mnemonics.