Entraînement aux concepts de ce débat

According to the 2023 CFA Institute survey cited in the debate, what exact percentage of institutional portfolio managers use technical analysis as a primary input for trading decisions?

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• A.18%
• B.80%
• C.45%
• D.32%

Which specific metric quantifies the percentage of a portfolio's holdings that differ from its benchmark index to measure active trading behavior?

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• A.Tracking Error
• B.Active Share
• C.Passive Share
• D.Turnover Ratio

The negative thesis argues that combining primary and secondary users of technical analysis pushes the total engagement to what specific percentage range, undermining the original claim?

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• A.90-100%
• B.10-20%
• C.40-50%
• D.60-70%

Under which specific condition does the Weak-Form Efficient Market Hypothesis (Fama 1970) break down, allowing technical analysis to potentially generate risk-adjusted excess returns?

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• A.When historical price and volume information is not costlessly and instantly incorporated into current market prices.
• B.When corporate insiders trade on non-public, material information before it is released.
• C.When fundamental public data like earnings reports and balance sheets are ignored by investors.
• D.When the central bank unexpectedly changes interest rates during a trading session.

According to Noise Trader Theory (De Long, Shleifer, Summers, and Waldmann 1990), why are rational arbitrageurs unable to fully eliminate mispricing caused by technical traders?

• A.Arbitrageurs perfectly hedge their positions and immediately correct the mispricing without facing any financial risk.
• B.Arbitrageurs are restricted by SEC regulations from short-selling certain volatile stocks during market downturns.
• C.Arbitrageurs face "noise trader risk," meaning unpredictable irrational trading can push prices further from fundamentals and trigger margin calls before prices revert.
• D.Arbitrageurs lack the computational power and algorithmic speed to identify the mispricing in real-time against high-frequency traders.

In the Principal-Agent Theory in Delegated Portfolio Management (Ross 1973), which assumption explains why an individual manager's technical trading might deviate from the institution's optimal aggregate strategy?

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• A.The manager is mathematically incapable of understanding the institution's complex algorithmic trading models.
• B.The manager and the institution share perfectly aligned incentives, ensuring all technical trades maximize institutional wealth.
• C.The manager uses a different charting software than the institution's primary compliance department.
• D.The manager has asymmetric information and personal incentives, such as career risk or bonus structures, that diverge from the institution's long-term goals.

How does the increasing deployment of AI and Machine Learning in high-frequency trading directly challenge the static assumptions of the Weak-Form Efficient Market Hypothesis regarding costless information?

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• A.AI and ML require massive capital investments in infrastructure and data, proving that extracting historical price patterns is highly costly rather than costless.
• B.AI and ML perfectly validate the hypothesis by instantly and costlessly eliminating all historical price patterns.
• C.AI and ML algorithms are increasingly regulated by the SEC to prevent market manipulation.
• D.AI and ML can predict the future with absolute certainty, making all human traders and fundamental analysis obsolete.

Under the Adaptive Markets Hypothesis, how would a shift in the current Fed cycle toward quantitative tightening most likely alter the temporary alpha generated by technical trading heuristics?

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• A.The shift guarantees that all technical indicators will immediately signal a "strong sell" across all asset classes.
• B.The shift alters the market environment, causing previously successful technical heuristics to fail as market participants adapt to the new liquidity constraints.
• C.The shift permanently locks in the alpha of existing heuristics because human behavior never changes regardless of monetary policy.
• D.The shift increases the yield on 10-year Treasury bonds, making them more attractive to foreign investors.

Regarding the persistence of technical trading profits, how does the evolutionary spectrum of the Adaptive Markets Hypothesis (Lo 2004) fundamentally contradict the core claim of the Weak-Form Efficient Market Hypothesis (Fama 1970)?

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• A.AMH argues that markets are completely random and unpredictable, whereas Weak-Form EMH argues that markets follow predictable evolutionary cycles.
• B.AMH relies on high-frequency trading data from the 2000s, whereas EMH was developed using stock data from the 1960s.
• C.AMH proves that technical analysis is always superior to fundamental analysis, while EMH proves fundamental analysis is always superior.
• D.AMH argues that technical trading profits can temporarily persist and evolve as market environments change, whereas Weak-Form EMH claims past price patterns can never yield consistent excess returns.

Which assumption regarding the investment horizon of rational actors most sharply differentiates Noise Trader Theory (De Long, Shleifer, Summers, and Waldmann 1990) from the Weak-Form Efficient Market Hypothesis (Fama 1970)?

• A.Noise Trader Theory assumes rational actors only trade intraday, while EMH assumes they only buy and hold for decades.
• B.Noise Trader Theory assumes rational arbitrageurs have short, finite investment horizons, whereas EMH implicitly assumes arbitrageurs can hold positions indefinitely until prices revert to fundamentals.
• C.Noise Trader Theory assumes rational arbitrageurs have infinite investment horizons, allowing them to outlast any irrational market behavior.
• D.Noise Trader Theory assumes rational actors are subject to capital gains taxes, which alters their holding periods compared to tax-exempt EMH actors.