7. (2 points) Recall that the value effect says that stocks with higher book-to-market (BM) ratios tend to have higher average returns. Specifically, at any given time, one can take the previously released book value of equity for a company and divide it by the latest market value of equity to arrive at the BM ratio for that company. Then, she can buy (short) companies with higher (lower) BM ratios and beat the market. Given the information above, choose the strongest correct statement you can make below. 1 (a) This violates the weak form of market efficiency. (b) This violates the semi-strong form of market efficiency. (c) This violates the strong form of market efficiency