I believe the answer to this is E. Any help is appreciated. Thanks. Which of the

Question

I believe the answer to this is E. Any help is appreciated. Thanks.

Which of the following is correct?

a) The Efficient Market Hypothesis suggests that the market does not price stocks fairly; hence, managers should make decisions based on the premise that a firm's stocks are undervalued or overvalued.
b) An individual who has information about past stock prices would be able to profit from this information if weak-form market efficiency exists.
c) An individual who has inside information about a publicly traded company should be able to profit from this information if strong-form market efficiency exists.
d) For the Efficient Market Hypothesis to hold true, every individual investor must be "rational"
e) Semistrong-form market efficiency means that stock prices reflect all public, but not necessarily all private information.

Explanation / Answer

I too, find choice (e) is the ANSWER. In semi-strong market, prices adjust to all new public information very fast and no extra returns can be earned on it. So,the private or hidden information is not generally discounted in the going prices in this market.

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