An analyst engaging in fundamental analysis is most likely to enjoy supernormal profits in which of the following markets? Semi-strong form efficient

Answers 20) Supernormal profit / Abnormal profit is the excess profit or the difference btween the stock's actual return and the benchmark. Any return over and above the normal market index.

In semi-strong form efficient market public information is used to calculate the stock's current price. Therefore technical analysus as well as fundamental analysis is not useful to gain higher returns in the market.

In strong form efficient market both public and private information is used to to evaluate stock's current price. Insider trading and front running also does not help gain any advantage over and above the market. Therefore investors cannot make any kind of abnormal returns.

In Arbitrage market investors gain from simultaneous buying and selling of security in different markets. investors take advantage of the price dicrepencies in the markets. the price differences are very minute and transaction costs are high so arbitrage strategies may neutralize the profits.

In weak form efficient market all the past and historical data is considered while evaluating the stock's current price. So technical analysis is not useful. But fundamental analysis help find over/under valued stocks and therefore can help earn higher than market profits.

Therefore,  An analyst engaging in fundamental analysis is most likely to enjoy supernormal profits in weak form efficient market.