Ch 02: Assignment. Financial Markets and Institutions as Identify the form of capital market efficiency under the efficient market hypothesis described in the following statement: Current market prices reflect all relevant puidy wallable information This statement is consistent with Semistrong form efficiency Strong form efficiency Weak form efficiency Consider that there is a semistrong form of efficiency in the markets A pharmaceutical company announces that it has received Federal Drug Administration approval for a new allergy drug that completely prevents hay fever. The consensus analyst forecast for the company aming per share (EPS) 54.50, Butters know that with this new drug. earnings wel Increase and drive the EPs to $5.00. What will happen when the company releases its next naming report The stock price will not change, because the market already incorporated that information in the stock price when the announcement made There will be some varity in the stock price when the earnings report is related tomout to determine the impact on the stock price The stock price will create and satinat a new equilibrium vel 8. The efficient markets hypothesis The concept of market efficiency underpins almost al financial theory and decision models. When financial markets are officient, the price of a security such as a share of a particular corporation's common stock-should be the present value estimate of the firm's expected cash flows counted by its appropriate rate of return (also called the intrinsic value of the stock) Almost all financial theory and decision models assume that the financial markets are efficient. The internationalency of financial markets determines the ability of investors to beat the market and eam (or abnormal) return on their investments. If the markets are ident, they will react rapidly as new relevant information becomes available. Financial theorists have identified the levels of informationalency that reflect what information is corporated in stock prices Identify the form of capital market efficiency under the efficient market hypothes described in the following statement Current market prices meet all relevant publicly available information This tatement content with Semistrong for tidenes strong to Westona Consider that the fomentar