- This topic has 3 replies, 2 voices, and was last updated 4 years ago by
.
- Posts
Hello sir,
i was reading the examiner report of Sep 19, and i found a comment of the examiner very confusing.. the line is“A number of candidates also struggled to correctly identify the impact on share prices under various forms of market efficiency. In particular, it is commonly thought that in a weak form efficient market that share prices are slow to react to new information, however this is not the case.”
when we studied weak form, we learned that share prices are based on past information and price of share follow randomly.so new information shouldnt immediately effect share prices but the examiner says otherwise. could you please explain what might the examiner mean?.
Thanks
New information will affect share prices, but the difference between weak and strong is as to when shareholders know about the new information.
With weak form efficiency, share prices only react to new information when it is publicly available. With strong form efficiency share prices react to any new information whether or not it has been made publicly available.
- The topic ‘Weak form Efficient Market’ is closed to new replies.