- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 36. Market Organization and Structure
- Subject 1. The Functions of the Financial System
CFA Practice Question
The key difference between investors and information-motivated traders is ______.
A. their motives for trading
B. the risks they take
C. their expected holding periods
Explanation: Investor can take high or low risk positions, and their holding periods can be long or short. The characteristic that most distinguishes investors from information-motivated traders is the return they expect.
User Contributed Comments 6
| User | Comment |
|---|---|
| blink78597 | motive for investing is to make money |
| jnptrsn1 | Wouldnt an investor generally prefer a longer time frame, and an information motivated trader want to base their entering and exiting positions on specific events? |
| tjlbutler | I concur with both of you guys |
| navarro | I personally don't like this question. Is confusing. |
| ascruggs92 | I got this wrong but thinking about it now makes sense. The key difference is motive for trading. Investors seek to make money by holding a portfolio of diversified assets over time, information motivated traders seek to make money by predicting the market's reaction to new information. Holding period can be long or short for a trader, although it is typically short |
| awbronson | "Motive" is a poor word choice here. They should ask, what is the "method of security selection" or something like that. Motive is about making money ultimately for both traders and investors. |