CFA Practice Question
Studies have found that stock market specialists have tended to earn ______.
A. above-average rates.
B. average returns.
C. below-average returns.
Explanation: Specialists have been found to have monopolistic access to information about unfilled limit orders that seems to have allowed them to earn above-average returns. This result does not support the strong-form EMH because the hypothesis contends that stock prices reflect all information, so no group can consistently experience above-average returns.
User Contributed Comments 3
| User | Comment |
|---|---|
| Peter | The book also states that specialists routinely share this information with other market participants, e.g. brokers, thereby eliminating this potential competitive advantage. Now figure which answer is correct... |
| salma | however, whether a specialist share the info today or tomorrow does make a huge difference! Timing is important in this market. |
| egghead | I based my selection on one of the smart money techical indicator - specialist short sale ratio. Since they are considered smart they probably earn more then the average dummy exessive money owner |