CFA Practice Question
Analyzing the returns available to security analysts and professional money managers is one way of testing the ______-form EMH.
A. weak
B. strong
C. semistrong
Explanation: Analyzing the returns available to corporate insiders, stock exchange specialists, security analysts and professional money managers (all of whom may have access to private information) is one way of testing the strong-form EMH.
User Contributed Comments 6
| User | Comment |
|---|---|
| koushaku | But in a perfect world where all security analysts and pros were CFA's, they couldn't use insider/non-public info ...... something to think about... |
| KD101 | Professional MMs are not supposed to have any more information than rest of us and if they have obtained using illegal sources or insider information they are not supoosed to use it. |
| armanaziz | law/ CFA practice books does not disallow use of "immaterial" non-public info. That's how security analysts and professional money managers add value. |
| ontrack | I thought professional MM and analysts can be considered to not have insider info (for the purposes of this Qs atleast) and so marked C. I was wrong. |
| JCopeland | I selected C, as well. When insiders and exchange specalist are incorporated into the question, 2 types of people who have inside information and one who is legally permitted to trade upon (specialist w/ limit order book) it makes it apparent that it is a test of the strong from. The absence of these two should be a material ommission as money managers and analysts may have access to inside information but are strictly prohibited and penalized for trading upon it. |
| harrybay | In no way this question implies money managers have access to inside information. Which forces us to assume a normal real life case where they do not have access ton inside information. Now I know that people who fail the CFA are no less intelligent than the one who pass. They simply have more common sense. |