Forms of EMH

In markets that are semi-strong-form efficient, which of the following statements is least likely correct?

A. A trader who uses technical analysis cannot outperform the market on a risk-adjusted basis.

B. Analysis based on financial statements will not lead to positive abnormal returns on average.

C. All publicly available information is fully reflected in current market prices.

The key is “least likely”. When you see that, replace the phrase with “wrong” and it’s easier to see. The answer is “C”.

A is a true statement for both weak form and SS form efficient markets

B is a true statement for SS efficient markets - in these markets, publicly available info is already priced in.

“C” is the definition of STRONG FORM efficient markets. So it’s an incorrect statement, and therefore the correct answer.