The U.S. Securities and Exchange Commission periodically charges individuals for insider trading and claims those individuals have made unfair profits. Based on this fact, you would tend to argue that the financial markets are at best _____ form efficient.

A) weak
B) semi-weak
C) semi-strong
D) strong
E) perfect

Question

Kshatriya Bhavana · Accepted Answer

Final Answer : C, Explanation :  The fact that the SEC is able to charge individuals for insider trading suggests that the financial markets are at least semi-strong form efficient. This is because insider trading involves using non-public information to gain an unfair advantage in the market, and if the market was completely efficient, this would not be possible. Therefore, weak and semi-weak forms are less applicable, and strong and perfect forms are too strong of assumptions.

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