CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

The semi-strong form of market efficiency is inconsistent with which of the following investment strategies?

I. Increasing a portfolio's allocation to stocks following a down year in the stock market
II. Buying stocks with a low price/earnings ratio
III. Buying stocks with above-average projected earnings growth
Correct Answer: I, II and III

All of the above information is either current- and historical-security-market-information-based or public information. Therefore, any profitable trading strategy based on these ideas would violate the semi-strong form.

User Contributed Comments 3

User Comment
azramirza Can someone highlight this?.?
viruss you cannot earn abnormal-risk adjusted returns using fundamental analysis in a semi-strong MEH ...
johntan1979 So I suppose that answer I being correct implies that EMH do not believe in market correction at all?
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