Question

The U.S. Securities and Exchange Commission periodically charges individuals with insider trading and claims those individuals have made unfair profits. Given this, you would be most apt to argue that the markets are less than _____ form efficient.
a.weakb.semiweakc.semistrongd.stronge.perfect

Answer 1

Answer:

The correct answer is option d.

Explanation:

The effficent market hypothesis is an investment theory which advocates that the stock prices reflect all the available information. As a result, stocks are always traded at their fair value.

The strong form of efficient market says that stock prices reflect all information whether public or private.

This implies that investors cannot have more than normal profits. In the above example, the investors are able to make profit through insider information. This means that the market is less than strong form efficient.