When markets are efficient, the stock price is considered to be the intrinsic value of the stock. more than equal to The informational efficiency of financial markets determines the ability of investors to beat the market and earn abnormal returns on their investments. If the markets are efficient, they will react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency that reflect what information is incorporated into stock prices. Consider the following: Current market prices reflect all relevant information, whether it is known publicly or privately. Identify the form of capital market efficiency based on the preceding statement. Weak-form efficiency Semistrong-form efficiency Strong-form efficiency Consider that there is a strong form of efficiency in the markets. A pharmaceutical company announces that it has received Health Canada's approval for a new allergy drug that completely prevents hay fever. The consensus analyst forecast for the company's earnings per share (EPS) is $5.00, and insiders agree with analyst expectations. They too expect that, with this new drug, earnings will drive the EPS to $5.00. What will happen when the company releases its next earnings report? O There will be some volatility in the stock price when the earnings report is released; it is difficult to determine the impact on the stock price. The stock price will increase and settle at a new equilibrium level. The stock price will not change, because the market already incorporated that information into the stock price when the announcement was made. An analyst who attempts to find undervalued securities by analyzing past trends, patterns, and investor mood performs a fundamental analysis technical analysis