Question 2.3: Which of the following statements about capital market effic...
Which of the following statements about capital market efficiency is not correct?
(a) If a stock market is weak form efficient, chartists cannot make abnormal returns.
(b) If a stock market is strong form efficient, only people with insider information can make abnormal returns.
(c) In a semi-strong form efficient market, fundamental analysis will not bring abnormal returns.
(d) If a stock market is semi-strong form efficient, all past and current publicly available information is reflected in share prices.
(e) If a stock market is weak form efficient, all historical information about a share is reflected in its current market price.
The incorrect statement is (b) since, if capital markets are strong form efficient, then nobody, not even people with insider information, will be able to make abnormal returns.