Which of the following statements most accurately describes the weak-form Efficient Market Hypothesis (EMH)? The weak-form EMH assumes that current security prices: A. fully reflect all information from public and private sources. B. fully reflect all security market information, including transactions by exchange specialists. C. adjust rapidly to the release of all public information; that is, security prices fully reflect all public information. Correct answer is B…but why? Why is C incorrect? does the weak form assume prices change slowly to release of public information?
C is incorrect b’cuz it says release of all “public information”…public information is available to investors in semi-strong form… in weak form, all public info is not available.
Weak EMH claims that prices on traded assets (e.g., stocks, bonds, or property) already reflect all past publicly available information. Semi-strong EMH claims both that prices reflect all publicly available information and that prices instantly change to reflect new public information. Weak: past info semi: past and present strong: past, present, and insider It’s meant to trick you and the question sucks, I agree
so basically… weak form: NOT ALL public information available (only some) semi strong: ALL public information available strong: ALL public and private information available is that right?
Some information meaning past. That’s why tech analysis is not useful under weak
Weak Form EMH states that technical analysis will not generate excess return. When all security market information is reflected in security prices, then technical analysis won’t be useful!