Question

A lawyer works for a firm that advises corporate firms planning to sue other corporations for antitrust damages. He finds that he can "beat the market" by short selling the stock of the firm that will be sued. This finding is in violation of the:


A. Semi-strong form market efficiency
B. The finding is not in violation of market efficiency at all
C. Weak and semi-strong form market efficiency
D. Strong form market efficiency
E. Weak form market efficiency

Answer 1

Answer: D. Strong form market efficiency

Explanation:

Strong form efficiency this is the most demanding version of the efficient market hypothesis (EMH) investment theory, Which states that for all information in a given market, whether it’s a public or private market, they are usually accounted for in a stock's price.