Efficient Market Hypothesis (EMH)

Question 1

Weak Form

Answer 1

The weak form states that the current market price already reflects all historic share price information.
If this is true, there is no benefit in looking at historic stock price charts and graphs as everyone else already knows this information.
Supports passive investment approach.

Question 2

Semi-Strong

Answer 2

The semi-strong form states that the current market price already reflects not only all historic share price information but also all other publicly available information.
This means that carrying out research about a company’s activities and its products will also be of no use as all other market participants already know the information.

Question 3

Strong

Answer 3

The strong form states that the current market price already reflects not only all historic share price information, all additional publicly available information but also all private information.