Weak, semi strong; strong EMH are the three forms of efficient market hypothesis. The weak form EMH states that current asset prices already reflect past price and volume information. The semi- strong form stipulates that all publicly available information is fully reflected in a security's current market price. The strong form EMH stipulates that private information or insider information also, is quickly incorporated by market prices and so cannot be used to reap abnormal trading profits.
The change in Montana’s share price is consistent with efficient markets hypothesis during the takeover battle. Some of the reasons for the statements are stated below.
There was speculation about Montana’s acquisition of Corbans Wines Limited in August. The acquisition announcement was made on 20th September 2000 and the final settlement took place on 10th November 2000. The upward trend in Montana’s share price is also a reflection of strong earnings growth and corporate activity. Lion acquired 42.8 million shares of Montana at $ 2.30 per share, 2.1 million shares at $ 2.47 per share in the month of May 2000 and August 2000 respectively. Lion’s acquisition of 8.7 million share at $ 2.60 per share and remaining 7.1 million shares at $ 2.60 per share of Guinness Peat Group Ltd. Lion Nathan and Masfen offer of $ 3.20 - $ 3.80 per share triggered the investors to perceive a takeover from Lion Nathan.
The EMH theory that information about the takeover is quickly incorporated into the assets price at any time holds true. As prior to Lions notice the weighted average share price over the twenty days was $ 3.38 per share and it went up to $3.95 in the month of December. On 8th... [continues]
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