CIMAPRA19-F03-1 Exam - Topic 2 Question 53 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 53
Topic #: 2

A listed company has recently announced a profit warning.

The company's share price fell 20% on the day of the announcement but had been fairly static in the weeks leading up to the announcement.

Which form of efficient market is most likely to be indicated by this share price movement?

AWeak form

BSemi-strong form

CStrong form

DRandom walk

Show Suggested Answer

Suggested Answer: B

by Sharee at Jun 28, 2022, 04:46 AM

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Kris

4 months ago

Surprised by the 20% drop, that's a huge reaction!

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Ocie

4 months ago

I think it's weak form, past prices shouldn't affect new info.

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Carissa

4 months ago

Wait, how can it be semi-strong if the price was static before?

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Larae

4 months ago

Agreed, the drop shows the market's efficiency.

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Myong

4 months ago

Definitely semi-strong form, the market reacted to new info.

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Golda

5 months ago

I thought the strong form was about all information being reflected in prices, but this situation seems more about public news affecting the price, so maybe semi-strong?

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Gail

5 months ago

This reminds me of a practice question we did on market reactions to earnings announcements. I think the semi-strong form fits best since the share price dropped after the profit warning.

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Janessa

5 months ago

I remember studying the efficient market hypothesis, and I think the semi-strong form might be relevant here since the price reacted sharply to new public information.

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Deeann

5 months ago

I'm a bit unsure, but I feel like the weak form wouldn't apply since the price movement seems to reflect new information rather than just past prices.

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Freeman

5 months ago

Mnemonics are super helpful for remembering tricky concepts like this. I'm glad the teacher came up with a fun one to make it easier to recall.

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Craig

5 months ago

Okay, let me think this through. The case feed is a specific feature, so it's probably not about switching to standard detail pages. I'll rule out D and focus on the other options.

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