Market Efficiency

CFA level I / Equity Investments: Market Organization, Market Indices, and Market Efficiency / Market Efficiency

Learning Outcome Statements
1. Market efficiency and related concepts
a. describe market efficiency and related concepts, including their importance to investment practitioners;

2. Market value and intrinsic value
b. distinguish between market value and intrinsic value;

3. Factors affecting market efficiency
c. explain factors that affect a market’s efficiency;

4. Weak-form, semi-strong-form, and strong-form market efficiency
d. contrast weak-form, semi-strong-form, and strong-form market efficiency;

5. Implications of each form of market efficiency
e. explain the implications of each form of market efficiency for fundamental analysis, technical analysis, and the choice between active and passive portfolio management;

6. Market anomalies
f. describe market anomalies;

7. Behavioral finance and market anomalies
g. describe behavioral finance and its potential relevance to understanding market anomalies.

Market Efficiency: Chapter Test
8 Questions, 12 Minutes

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