- CFA Exams
- CFA Exam: Level I 2021
- Study Session 19. Portfolio Management (2)
- Reading 56. Technical Analysis
- Subject 1. Definition and Scope
CFA Practice Question
A technical analyst would argue that accounting statements ______.
II. are incomplete
III. are governed by GAAP
I. are not needed to make investment decisions
II. are incomplete
III. are governed by GAAP
Correct Answer: I, II and III
Technical analysts believe that accounting statements, governed by GAAP, are incomplete and are not necessary to make investment decisions because only past price movements are relevant.
User Contributed Comments 6
| User | Comment |
|---|---|
| SriSri | What is GAAP ? |
| Lavay | Generally Accepted Accounting Principles |
| past1sttime | No one argues that accounting statements are governed by gaap, its a fact |
| johntan1979 | I agree. What's wrong with being governed by GAAP and what is there to argue about? As if GAAP standards makes people make poor investment decisions... |
| gill15 | What they mean by it is the information on financial statements can vary depending on methods and stuff. Technical analysis does not vary -- uses two variables price and volume.... |
| cfastudypl | Rightly so Gill 15 and on point, as Tech Analyst cannot be bothered with the nuances of various International Accounting Standards (IASs) or GAAP to make their decision. |