Question

Your friend Judy has gone to work for the CDC. Every day you call her at 3:30 PM and get an early forecast of what the new coronavirus numbers (which are released at 7) are expected to be. If you can make abnormal trading returns based on the information that Judy gives you, does this violate market efficiency?

Yes, this violates weak efficiency.

Yes, this violates semi-strong efficiency.

Yes, this violates strong efficiency.

No, this does not violate market efficiency.

Answer 1

The information that has been obtained from a friend who is working internally for a company and is providing the stats for coronavirus numbers is a type of insider news, and this insider news are not reflected into the prices

Insider news are a type of privately available information and these have not been discounted into the prices, so this is a violation of strong form of market efficiency because strong form of market efficiency advocates that all the publicly available information and privately available information must have been discounted into stock price.

It does not violate weak form of efficiency and semi strong form efficiency.

Correct answer would be option (C )yes ,this is violating strong efficiency.