Question

which of the following is a tenet of strong - form efficiency?
some forms of technical analysis techniques can be useful for producing excess returns.
investors can use the past prices of securities to predict their future prices.
share prices respond immediately to all information, whether public or private.
future prices cannot be predicted based on past prices.

Explanation:

To determine the tenet of strong - form efficiency, we analyze each option:

1. The first option says some technical analysis techniques can produce excess returns. But in efficient market hypothesis, especially strong - form, technical analysis should not give excess returns as all info is reflected. So this is incorrect.
2. The second option states that investors can use past prices to predict future prices. This is against the efficient market idea as in strong - form (and even weak - form to some extent), past prices should not be useful for prediction. So this is incorrect.
3. The third option: Strong - form efficiency in the efficient market hypothesis holds that share prices reflect all information, both public and private. So share prices respond immediately to all information (public or private) is a tenet of strong - form efficiency.
4. The fourth option, "Future prices cannot be predicted based on past prices" is more related to weak - form efficiency (which says past price info is already in the price), not strong - form.

Answer:

The option "Share prices respond immediately to all information, whether public or private." (the third option among the given choices)