Question

Suppose the evidence showed that managers made abnormally large returns (returns beyond justified by the stock's beta) on purchases of their company’s stock. This evidence supports the idea that markets are

1. efficient in the semi-strong form.
2. efficient in the strong form.
3. not efficient in the weak form.
4. not efficient in the strong form.

Answer 1

Answer will be d. not efficient in the strong form.
Since, the strong-form version of the efficient market hypothesis states that stock prices reflect all information relevant to the firm, even including information available only to company insiders (like managers).

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