CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

Tests of the EMH suggest that ______

I. if technical trading rules can predict profit opportunities, they are very short-lived.
II. very few fundamental indicators offer forecasting power.
III. despite the ability of Value Line forecasts to predict stock returns, trading profits are unlikely after adjusting the returns for transactions costs.
A. I and II
B. I and III
C. I, II and III
Explanation: All of these statements are conclusions of efficient markets tests. Despite that fact that we find several market inefficiencies, it is still the case that the individual investor and even many professional investors cannot profit from these known inefficiencies.

User Contributed Comments 7

User Comment
geet Thought EMH meant there is no forecasting power of indicators. Isnt B wrong then?
paolino9290 Yeah EMH means that, but tests have shown that some indicators have forecasting power
superjam I will forecast that stocks with a high dividend yield will see lower capital gain.
soarer1 so if the tests are correct, why are we trading again?
hannovanwyk its a race, whoever trades first is the winner :P
poomie83 because we are semi-strong inefficient
sevywonder Because Burton Malkiel was a hack and his theory can go to hell
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