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Chapter 20

7.4 Semi-strong form efficiency

In a weak form efficient market share prices incorporate all past information and all
publicly-available information. Semi-strong market efficiency incorporates weak form
market efficiency.

Evidence

Share prices react within 5 – 10 minutes of any new information being released:

 rising in response to good news

 falling in response to bad news

Conclusion for the stock market

 It is also semi-strong form efficient

 Fundamental analysis – examining publicly-available information will not provide
opportunities to consistently beat the market.

 Only those trading in the first few minutes after the news breaks can beat the
market.

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