5. Regarding the Efficient Market Hypothesis:


  • The strong form states that stock prices reflect all the information that can be observed on the trading floor.
  • The weak form states that current market prices reflect all information that can be relevant to the valuation of the firm.
  • The semi-strong form states all publicly available information about a firm’s prospects are reflected within the firm’s stock price.
  • The hypothesis does not hold if asset prices reflect all -including inside- relevant information.