The is gain advocated by many researchers namely Friend,

The efficient market hypothesis essentially explains that stock pricesare truly representative of all the available information and any newinformation being readily reflective of the share price (Richard & Witt, 1979).

Various tests ofefficient market hypothesis are conducted on the assumption of zero transactioncost, no taxation, and free access to the availability of information for allparties involved in the process and contract between them regarding theramification of information for security prices. It is not possible to testefficient market hypotheses directly as there would be a need to know marketpredicted net operational cash flows and predicted the average required rate ofreturn for all the future time period. The researcher would need to know allthe information available regarding the stock and the way information isreflected in stock price. A great deal of evidence supports the three formsi.e.

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, weak, semi-strong and strong form. The weak form of the efficient markethypothesis states the extent to which stock prices can be used to predictfuture price pattern. A great degree of evidence suggests that such patterncannot predict the future. Semi-strong form attempts to explore the extent towhich share prices fully reflect all the publicly available information. Thisassumption has been supported by Fama, Fisher, Jensen and Roll. Investorspredict and react to the publicly available information as to the stock priceto get any deviation from equilibrium market values.

Whereas strong form isdesigned to explore whether share prices are truly representative of all theinformation. The hypothesis is gain advocated by many researchers namelyFriend, Brown, Herman etc. various other studies find that stock marketprofessionals identified all the managers of unit trusts won’t be able to earna return greater than the return expected at particular market risk. Thoughsome evidence has also been found against specialists and corporate insiderswhich predicts that corporate insiders have exclusive access to the informationwhich equips them to earn future returns (Richard & Witt, 1979).