Which form of Efficient Market Hypothesis (EMH) includes all public and private information?

The correct answer is the strong form of the Efficient Market Hypothesis (EMH), which asserts that all available information—both public and private (or insider information)—is fully reflected in stock prices. This means that no one can consistently achieve higher returns than average market returns, regardless of the information they have access to, thus making it impossible to outperform the market on the basis of any information.

The strong form suggests that even those with insider knowledge cannot gain an advantage, indicating a high level of efficiency in the market. It posits that all investors have the same access to information, which is factored into asset prices, thereby preventing excess profits.

In contrast, the semi-strong form only considers public information, indicating that stock prices reflect all publicly available information but not necessarily private or insider information. The weak form focuses solely on past price and volume data, suggesting that historical prices are already reflected in current prices, while future price movements cannot be predicted based on this historical data alone. The dynamic form is not a standard categorization within EMH frameworks.