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hello sir, again me;)
Could you explain more about weak form efficiency, insider dealing (semi-strong) form and strong-form efficiency.
As i understood via insider dealing brokers and dealers can manipulate the prices and get the best deals? So its unfair? or what?
why the price is only fair at Fully efficient ( strong form efficiency) and why is then market’s best form while its in insider dealing…omg im so confused(
The price of a share is determined by shareholders expectations as to how well the business will do in the future.
How ‘accurate’ shareholders expectations are depends on how much information they have about the company’s future plans.
If the market was ‘strong-form’ efficient, then they would have complete information.
As things are at present the market is only semi-strong form efficient and so shareholders do not know everything that the company is planning for the future.
(Obviously the directors of the company do know this, but for them to trade in the shares because they know things are going to get better (or worse) would be insider dealing and would be illegal.)
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