Final answer:
The market is operating with at least the level of efficiency known as semi-strong form efficiency. Public information, such as news and financial statements, is reflected in current stock prices. This makes it difficult for investors to consistently earn abnormal returns by trading based on this information.
Step-by-step explanation:
The market is operating with at least the level of efficiency known as semi-strong form efficiency. This form of efficiency assumes that public information, such as news and financial statements, is reflected in current stock prices. In other words, the market quickly incorporates public information into stock prices, making it difficult for investors to consistently earn abnormal returns by trading based on this information.
For example, if a company announces positive earnings results, the stock price will likely increase as this information becomes public knowledge. Investors who attempt to trade on this information may find that the price has already adjusted, making it difficult for them to profit from this news.
Overall, semi-strong form efficiency suggests that investors cannot gain an advantage by solely relying on publicly available information since the market quickly incorporates it into prices.