- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 3. Market Efficiency
- Subject 2. Forms of Market Efficiency
CFA Practice Question
After careful analysis, Tim discovers that he can make above-normal returns on his investments if he buys oil company stocks just before noon on any given trading day and then sells them immediately before the market closes that day. Which of the following describes this event? This is a violation of ______ market efficiency.
B. semi-strong-form
C. weak-form
D. strong-form
E. This is not a violation of market efficiency.
A. all forms of
B. semi-strong-form
C. weak-form
D. strong-form
E. This is not a violation of market efficiency.
Correct Answer: A
User Contributed Comments 8
| User | Comment |
|---|---|
| jamiejamie | semi-strong and strong both encompass the weak form, therefore logically it must hold that all forms will be violated if this opportunity would arise, therefore it's A. |
| Gina | isn't this a violation of semistrong-form efficiency? - intraday effect. B? |
| morpheus918 | Yes, it violates all 3. |
| mtcfa | If it violates weak form, it violates the others as well. |
| stevelaz | It violates all 3 forms |
| Gooner7 | Should we make the assumption that if it violates the weak form than it violates all 3? That makes sense to me intuitively; kind of like m1,m2,m3 |
| birdperson | @gooner7 -its not an assumption. it is literally the theory itself. |
| khalifa92 | thus market is inefficient |