Which form of market efficiency is associated with publicly available information?

• A. Weak form efficiency
• B. Strong form efficiency
• C. Semi-strong form efficiency
• D. Efficient market hypothesis

Answer: (C)

The idea being tested is how quickly stock prices reflect information. In this view, there are different levels depending on what information is already baked into prices. When prices are said to reflect all publicly available information, it means that any news, financial reports, macro data, or other information that is freely accessible to investors is incorporated into prices almost as soon as it becomes available. Because of that rapid adjustment, trying to profit from trading on that public information after it is released is unlikely to yield consistently abnormal gains.

This form sits between the weakest form, which only claims prices reflect past price and volume data, and the strongest form, which would include private or insider information. The broader umbrella idea is the Efficient Market Hypothesis, but the form tied to publicly available information is the semi-strong form.