CFA Practice Question

There are 221 practice questions for this study session.

CFA Practice Question

Followers of technical analysis believe ALL of the following EXCEPT ______
A. there is no need to conduct fundamental analysis.
B. new information arrives randomly in the market.
C. it is important to move quickly or be one of the first to exploit trading opportunities.
Explanation: Technical analysts believe that information does not arrive randomly and that the market takes time to process it. With serial correlation in new information, trends develop that can be exploited. A trader does not have to be the first one to jump into the market, as the price trend tells the trader which way the market is headed.

User Contributed Comments 7

User Comment
anricus I didn't think it was necessary for technical analysts to move quickly since the market is slow to adjust and moves in trends! Therefore are A and C not contradictory?
adeelj The answer is fundamentally against the beliefs of Technical Analysts. The basic premise of technical analysts is that the price movements can be predicted by historical patterns, hence if information arrival is random, the predictability of future using the past is annuled. Therefore it is the correct answer.
ehc0791 I think the last choice is more correct than the selected choice. TA doesn't say they can predict the news. They say the market move is in trend, and they can identify the trend
gkobylko The last one is very tricky. Technicians don`t believe they have to be the first to exploit trading opportunities, but they should be ONE OF THE FIRST so they move early in the trend
sheenalim what is fundamental analysis?
arendb With a question like that you are on the wrong site Sheenalim
saadbhatty Phraseology is poor, could be fixed.
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