Efficient market hypothesis

Weak-form efficiency concerns past price and trading information; semi-strong efficiency includes public information; strong-form efficiency includes private information as well. Efficiency does not mean prices never change, every investor earns the same return or a price is always objectively correct. Prices respond to new information, which may be unpredictable. Distinguish informational efficiency from low transaction costs or efficient allocation of resources. Evidence of apparent excess returns must be assessed for risk, costs, chance and the information set used. The forms are theoretical benchmarks rather than universal descriptions of every market.