Financial theory states that: studying historical stock price movements to identify mispriced stocks: A. is effective as long as the market is only semi-strong form efficient. B. is effective provided the market is only weak-form efficient. C. is ineffective even when the market is only weak-form efficient. D. becomes ineffective as soon as the market gains semi-strong form efficiency.

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Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.