Why should I choose AnalystNotes?
AnalystNotes specializes in helping candidates pass. Period.
Basic Question 6 of 14
Most academics tend to believe that the ______ form of the efficient market hypothesis is true for the widely traded S&P 500 companies.
II. semi-strong
III. strong
I. weak
II. semi-strong
III. strong
User Contributed Comments 8
| User | Comment |
|---|---|
| jsheth | why not iii? |
| jwebbs | cuz acting on insider info is illegal maybe |
| Vadik | Semi-strong implies weak, thus II is more comprehensive answer. |
| mordja | The legality is not the issue. It is obvious that if you are the only person that knows something that will affect the price you can profit from it. Therefore we know that three can not hold true in reality. However to put a framework around information / analysis and pricing we need to assume some form of information is priced in. II is the generally accepted consensus and this includes I, thus both are correct. The fact that III is illegal can lead us to the conclusion that the majority believe the strong form is not true. |
| kutta2102 | For markets to have a strong form efficiency, empirical results would have to show that no one group investors that had access to private information has achieved excess risk-adjusted returns. It has been shown that certain groups of investors have been able to do this without breaking the law. For example, specialists have access to the limit order book and have routinely found to be making excess returns. |
| johntan1979 | Most studies support semi-strong, which includes weak form. |
| Shaan23 | I chose II only. |
| chesschh | you can make profit illegaly with insider info in the s&p 500 |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
contrast weak-form, semi-strong-form, and strong-form market efficiency
explain the implications of each form of market efficiency for fundamental analysis, technical analysis, and the choice between active and passive portfolio management
CFA® 2024 Level I Curriculum, Volume 3, Module 3.