What is semi-strong form market efficiency based on?

Semi-strong form market efficiency asserts that all public information is fully reflected in asset prices at any given time. This encompasses not just historical prices and trading volumes, but also all publicly available data such as financial statements, news releases, and economic indicators. The implication of this theory is that it is impossible for investors to achieve excess returns using this public information, as any relevant public news is quickly assimilated into the pricing of the assets.

This concept is a part of the broader Efficient Market Hypothesis (EMH) framework, which classifies market efficiency into three forms: weak, semi-strong, and strong. The semi-strong form specifically emphasizes the role of all public information. Therefore, investors relying solely on public data for investment strategies cannot consistently outperform the market.

The other options do not fully capture the essence of semi-strong market efficiency. While past variances pertain to the weak form efficiency, and the inclusion of private information relates to the strong form, semi-strong is distinct in its focus solely on public data.