CFA Practice Question

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CFA Practice Question

Technical analysts refer primarily to charts when making investment decisions since they feel that ______

A. news is too general to impact individual stocks.
B. news is a determining factor in beta.
C. news is discounted into the price.
Correct Answer: C

If announcements or news does not reveal something new, it has already been discounted into the price and therefore has no impact on the stock price or volume.

User Contributed Comments 3

User Comment
babs but that implies for the fundamentalists and weakform EMH?
viannie I thought this implies strong form of EMH...since strong form = no news is new enough to alter price of stock such that someone can arbitrage from it. News in the market is disseminated evenly to everyone prices of stock won't change drastically
viannie Babs, you are right. Ignore my 1st comment. Just read textbook ;)
Fundamentalist = strong form of EMH
Technical analyst = weak form of EMH therefore, tio them stock prices do not change drastically but persist over a trend
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