CFA Practice Question

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
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