Which group of investors is capable of earning consistent, superior profits if financial markets are semistrong-form efficient? Ignore any legal considerations.
A) Technical analysts
B) Fundamental analysts
C) Company insiders
D)Mutual fund managers

Question

Quizplus · Accepted Answer

Company insiders, who have access to non-public information about a company, are capable of using this information to earn consistent, superior profits even in semistrong-form efficient markets. However, insider trading is illegal, and individuals who engage in it can face severe legal consequences. Therefore, we should ignore any legal considerations in this hypothetical scenario. Technical analysts rely solely on price and trading volume data to make investment decisions, so they may not necessarily perform well in semistrong-form efficient markets where this information is already reflected in stock prices. Fundamental analysts, who analyze financial statements and other company data, can still uncover mispricings in semistrong-form efficient markets, but their ability to earn consistent, superior profits may be limited. Mutual fund managers can also earn superior profits by leveraging their expertise and resources, but the average mutual fund has been shown to underperform the market over the long term.

Which Group of Investors Is Capable of Earning Consistent, Superior