The correct answer is: Individual share price movements can always be predicted from past price movements.
The market will consider information about the company's future prospects, which do not depend on how it has performed in the past.
The key to market efficiency is the availability and processing of information. If all relevant information is easily available to all investors, and investors respond to information in a rational way, then share prices will move quickly to reflect this information in a logical manner.
The transaction costs of buying and selling should not be so high as to discourage trading significantly.
The market should be large enough so that no one individual can, by his actions, affect the movement of the market.
