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Why is the following statement below false ?
Statement : Only markets which are strong-form efficient will not be affected by creative accounting or window dressing of accounts .
I have another question that i’m not sure about. My answer for the following question below is different from the answer key.
Qn ) G plots the historic movements of share prices and uses this analysis to make her investment decisions.
To what extent does G believe capital markets to be efficient ?
Answer: Not efficient at all
My answer is weak-form efficient. Why is this wrong ? Historic movements of share prices are past data right ? Which means it relates to weak-form efficient right ?
If markets are strong-form efficient, then shareholders have access to all information but that doesn’t mean that they still cannot be ‘fooled’ by creative accounting etc..
Historic movements of share prices are not past information about the company itself – only about what happened to the actual share price.
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