Hi guys
Maybe I’m gong crazy but I can’t get my head around contradictions to these forms of market efficiency. In the CFA1 Mock, afternoon session, Q90 it says the following:
"An observation that stocks with above average price-to-earnings ratios have consistently underperformed those with below average price-to-earnings ratios least likely contradicts which form of the market efficiency?
Answer is B, strong form, with the explanation that it’s a contradiction of the weak form and the semi-strong form because all the information used to categorize stocks by their price-to-earnings ratios is pubicly available.
Yep, but strong form includes publicly-available information too and captures everything in semi-strong and weak forms so how is it that this is least likely to contradict the strong form?
Someone please provide me the “d’uh” answer I’m looking for here… I thought I was nailing this stuff but clearly peaked too soon!