Strong Form Efficiency

What is 'Strong Form Efficiency'

Strong form efficiency is the strongest version of market efficiency. It states all information in a market, whether public or private, is accounted for in a stock price. Not even insider information could give an investor the advantage.

BREAKING DOWN 'Strong Form Efficiency'

This degree of market efficiency implies that profits exceeding normal returns cannot be made, regardless of the amount of research or information investors have access to.

RELATED TERMS
  1. Price Efficiency

    The premise that asset prices are efficient, to the extent that ...
  2. Allocational Efficiency

    A characteristic of an efficient market in which capital is allocated ...
  3. Economic Efficiency

    A broad term that implies an economic state in which every resource ...
  4. Efficiency

    A level of performance that describes a process that uses the ...
  5. Insider Information

    A non-public fact regarding the plans or condition of a publicly ...
  6. Market Efficiency

    The degree to which stock prices reflect all available, relevant ...
Related Articles
  1. Professionals

    The Efficient Market Hypothesis

    CFA Level 1 - The Efficient Market Hypothesis. Learn the basics of the efficient market hypothesis. Includes the assumptions and expectations behind this theory on capital markets.
  2. Active Trading

    Market Efficiency Basics

    Market efficiency theory states that a stock’s price will fully reflect all available and relevant information at any given time.
  3. Active Trading

    What Is Market Efficiency?

    The efficient market hypothesis (EMH) suggests that stock prices fully reflect all available information in the market. Is this possible?
  4. Active Trading Fundamentals

    Efficient Market Hypothesis: Is The Stock Market Efficient?

    Deciding whether it's possible to attain above-average returns requires an understanding of EMH.
  5. Options & Futures

    Efficiency

    Just about every aspect of efficiency is good for the environment.
  6. Economics

    Explaining Economic Efficiency

    Economic efficiency is achieved when every resource is optimally allocated to minimize waste and best serve each person in that economy.
  7. Economics

    Explaining Efficiency

    Efficiency refers to the ability to make something with the fewest resources possible.
  8. Professionals

    Capital Market Efficiency

    We look at the efficient market hypothesis and see if it holds up.
  9. Professionals

    Efficient Market Hypothesis (EMH)

    Efficient Market Hypothesis (EMH)
  10. Professionals

    Standard II-A: Material Nonpublic Information

    CFA Level 1 - Standard 2 Integrity of Capital Markets, Standard II-A: Material Nonpublic Information
RELATED FAQS
  1. What are the differences between weak, strong and semi-strong versions of the Efficient ...

    Discover how the efficient market theory is broken down into three versions, the hallmarks of each and the anomalies that ... Read Answer >>
  2. What is an efficient market and how does it affect individual investors?

    When people talk about market efficiency they are referring to the degree to which the aggregate decisions of all the market's ... Read Answer >>
  3. Does a high efficiency ratio mean that the company is profitable?

    Understand the variety of efficiency ratios and why a high efficiency ratio does not necessarily mean a company is operating ... Read Answer >>
  4. What are the primary assumptions of Efficient Market Hypothesis?

    Find out about the key assumptions behind the efficient market hypothesis (EMH), its implications for investing and whether ... Read Answer >>
  5. Has the Efficient Market Hypothesis been proven correct or incorrect?

    Explore the efficient market hypothesis and understand the extent to which this theory and its conclusions are correct or ... Read Answer >>
  6. Can you accidentally engage in insider trading?

    Learn why it's possible to commit insider trading by accident, and why insider trading laws create logical inconsistencies ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center