Which level of the Efficient Market Theory assumes that non-public information is reflected in prices:

Question

BlackTom AI · Accepted Answer

The strong form of the Efficient Market Hypothesis (EMH) declares that asset prices fully reflect all information, both public and private (including insider or non-public information).

Relevant concepts:
- Weak-form efficiency: prices reflect all historical market data (past prices, volumes). Technical analysis cannot generate consistent excess returns.
- Semi-strong form efficiency: prices quickly incorporate all publicly available information (financial statements, news, macro data); fundamental analysis cannot generate consistent excess returns after public release.
- Strong-form efficiency: prices reflect all information—public and non-public (insider information included). No one can earn abnormal returns, even with private information.

Step-by-step reasoning:
1. Identify the type of information in the question: “non-public information” means private or insider information not available to the general investing public.
2. Match this information type to EMH definitions:
   - Weak form deals only with past market data, so it does not cover non-public information.
   - Semi-strong form covers all publicly available information, so it excludes private/insider information.
   - Strong form explicitly includes non-public (private/insider) information as being reflected in prices.
3. Therefore, only the strong form asserts that non-public information is already incorporated into market prices.

Why the correct answer is correct:
- The defining characteristic of strong-form EMH is that no information—public or private—can give an investor an advantage because prices already reflect it. That directly matches “non-public information is reflected in prices.”

Why other options are incorrect:
- Weak Form: only historical market data; excludes public and private fundamental information.
- Semi-Strong Form: includes all public information but not private/insider information.
- Semi-Weak Form: not a standard EMH category; if intended as the same as weak form, it still excludes non-public information.

Conclusion: The correct answer is Strong Form, which matches the provided answer.

Which level of the Efficient Market Theory assumes that non-public information is reflected in prices:单项选择题

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