Give an example for all three levels of efficiency.

The three numerous variations of the efficient market hypothesis are different applications of similar

fundamental concepts. The weak form states that no specific kind of technical evaluation is capable

of being employed to assist traders in determining trading decisions and that current stock prices

accurately represent all historical data. Stock prices accurately represent all previous prices and

volume data in weak form. This suggests that historical trade information and trends are

unable to be applied to forecast future price changes. Examples of weak form efficiency include

the random walk hypothesis, which predicts that stock prices will fluctuate with unpredictability without

being influenced by past performance. Technical analysis and trading systems that mainly depend on

historical price trends do not regularly provide profits for investors.

Semi-strong Form

Semi-strong form efficiency implies that stock prices represent not just previous data but also every

piece of publicly accessible data. Financial reports from the firm, press announcements, along with

additional information regarding the market are included in trading only based on widely available

information and can never result in above-average results in a semi-strong efficient market. Every

new piece of data is immediately reflected in stock prices, eliminating any opportunity for investors to

obtain a competitive advantage. Semi-strong form efficiency is frequently indicated when stock prices

react quickly to press releases like earnings statements or mergers and acquisitions.

Strong Form

The most effective market efficiency is known as "strong form efficiency." In strong form, every piece

of information, including that which is accessible to the public and that which is unknown to the

public, is entirely accounted for in the stock prices as they are right now. It entails that stock prices

take into account every detail, such as past data, knowledge that is accessible to the general public,

as well as unreleased or confidential information. Despite having the advantage of insider information,

no person or team of investors is capable of consistently making superior returns in a strong form

efficient market. It is debatable to what extent markets are effective or profitable because of insider

trading and other market inconsistencies, according to experts.