Final answer:
The semi strong-form efficient market hypothesis (EMH) suggests that all publicly available information is already reflected in stock prices. Event studies and fundamental analysis are two tests used to examine the semi strong-form EMH.
Step-by-step explanation:
The semi strong-form efficient market hypothesis (EMH) is a theory in finance that states that all publicly available information is already reflected in the stock prices. In other words, it suggests that investors cannot consistently make superior returns by analyzing public information. Two sets of tests used to examine the semi-strong form EMH are event studies and fundamental analysis.
An event study looks at the impact of an event or news announcement on the stock price. For example, if a company announces positive earnings, an event study would analyze how the stock price reacts to that information. If the market efficiently incorporates this information and there are no abnormal returns, it supports the semi strong-form EMH.
Fundamental analysis, on the other hand, involves evaluating the underlying financial statements and performance indicators of a company to determine its intrinsic value. If the market is semi-strong efficient, then fundamental analysis should not consistently result in superior returns either.