What is the semi-strong form of efficiency?
Understand the Problem
The question is asking for a definition of the semi-strong form of market efficiency. This concept relates to the efficient market hypothesis (EMH) in finance, which describes the extent to which market prices reflect available information.
Answer
Market prices reflect all publicly available information.
The semi-strong form of efficiency states that market prices reflect all publicly available information. Therefore, investors cannot use public information to gain an advantage.
Answer for screen readers
The semi-strong form of efficiency states that market prices reflect all publicly available information. Therefore, investors cannot use public information to gain an advantage.
More Information
The semi-strong form of efficiency is a level of the Efficient Market Hypothesis (EMH). The EMH suggests that it is impossible to consistently achieve returns above average using publicly available information.
Tips
A common mistake is to think public information can be used for an advantage. With semi-strong efficiency, all public information is already factored into the price.
Sources
- The Weak, Strong, and Semi-Strong Efficient Market Hypotheses - investopedia.com
- What Is Semi-Strong Form Efficiency? (With Examples) - Indeed - ca.indeed.com
- Efficient Market Hypothesis (EMH) | Definition + Examples - wallstreetprep.com
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