The question regarding market efficiency is whether investors can earn abnormal risk adjusted profits. If the stock price run-up occurs when only insiders are aware of the coming dividend increase, then it is a violation of strong-form, but not semi strong-form, efficiency. If the public already knows of the increase, then it is a violation of semi strong-form efficiency.

(a) Explain the relevance of the efficient market hypothesis. [5 marks]

(b) Describe the 3 forms of efficient market hypothesis. [9 marks]

(c) How is the Efficient Market Hypothesis used in the real world? [4 marks]

Example of Biggest Mergers and Acquisitions of The Decade (2010-2020)