- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 3. Market Efficiency
- Subject 1. The Concept of Market Efficiency
CFA Practice Question
Which statement is false?
II. In a very inefficient market an active investment strategy is always preferable to a passive investment strategy.
I. In an efficient market, superior, risk-adjusting returns (net of all expenses) are not possible.
II. In a very inefficient market an active investment strategy is always preferable to a passive investment strategy.
Correct Answer: II
An active investment strategy MAY, but will not always, outperform a passive investment strategy on a risk-adjusted basis.
User Contributed Comments 4
| User | Comment |
|---|---|
| czar | but isnt that in an efficient market only? Pls clarify |
| thekobe | you have to put a lot of attention at the word "always" |
| johntan1979 | What the heck with all these word plays... :( Always, may, except... As if the exam itself wasn't tough enough already |
| Inaganti6 | I feel like half the CFA is about paying attention to semantics. |