A lot of people go w acute, since it represents easy arbitrage. But I also recall that Chronic Structural imbalances are what hedge funds look for…wouldn’t a hedge fund strategy imply greater turnover?
I read the reading yesterday and it was acute because there would be more hedging…hence more trading. I put chronic…and the lakers beat the supersonics.
I said chronic.
Accute as arbitragers belive they can easily make profit.
It’s Acute. If you picked Chronic, you smokin some Chronic.
Check CFAI texts, Vol. 2, page 84 first full paragraph…the answer is acute.
Acute…btw can I get Chronic from my local dealer?
of course acute, arbitragers trading a lot. if you dont think there is arbitrage opportunity( e.g. market is efficient), you just buy and hold
Lurker here, probably got it wrong, but the way i approached it was that during chronic inefficiencies people trade more when they actually should not for example during times of an ebullience cycle or convoy behavior something like a bubble and with acute its so easy to exploit or short that it doesnt last that long, for e.g. market tanks 10% in a day. And that more would trade during chronic than a transient acute, my 2 cents.
Do you guys realize you need to base stuff off of CFAI readings? There’s a right way, a wrong way, and the CFAI way… You are studying their materials. You need to answer their questions based on that, not what a hedgefund would do…
I’'m positive the answer is acute after reading the text. I put chronic. I honestly had no idea what the heck the difference was b/c I didn’t remember studying that at all! But, it is clear in the text and I even had it in my notes! Just goes to show you it is hard to remember all of these silly details.
I read a lot of opinion on this acute v. chronic subject yesterday…the answer is cut and dried if you look in the text: “Acute inefficiencies are the discernible opportunities that can be exploited by accessible arb…their resolution occurs quickly, well withing the relevant time frame of arbitraging participants…Chronic inefficiancies tend to be less discernible, more ambiguoous, more resistant to rapid resolution…and generally longer term in nature.”
yeah thats fine, is what it is.
I see what you did there mark@dirtbags
I put chronic and my thinking was like this: if the markets were efficient then no trading would occur. Accute inefficiencies would cause increases in trading but they are very quickly exploited, so yes, trading would increase but not as much as chronic inefficiencies because those inefficiencies are more difficult to exploit and hence more trading would result in the attempt to do so. The material also stated that most active funds attempt to exploit these types of inefficiencies. Why do you think most traders trade to begin with? For arb opportunities? I don’t think so. They trade because they believe the prices are “incorrect” and move towards the direction they feel is more “correct”
GreenMonday Wrote: ------------------------------------------------------- > I put chronic and my thinking was like this: if > the markets were efficient then no trading would > occur. Accute inefficiencies would cause increases > in trading but they are very quickly exploited, so > yes, trading would increase but not as much as > chronic inefficiencies because those > inefficiencies are more difficult to exploit and > hence more trading would result in the attempt to > do so. The material also stated that most active > funds attempt to exploit these types of > inefficiencies. > > Why do you think most traders trade to begin with? > For arb opportunities? I don’t think so. They > trade because they believe the prices are > “incorrect” and move towards the direction they > feel is more “correct” Most traders dont trade for arb opps? what are you smoking dude. How do you think arb opps are eliminated? because thousands of traders are trading on it, scalping the profit.
some where i read that majority of invetsors focus on chronic inefficiencies although solution to acute is easy as compared to chronic.with this statemnet in mind about investors focussing on chronic…i suspect it was chronic…my 1 cent.
i hate so sound like a repeating-the-same-point-douchebag, JarJar, but if you read the paragraph in the text that i cited above, the answer is not subjective…imho
I was thinking how some people can’t short so people take advantage, chronic…but, It’s acute because CFAI said so.
but why are we only focussing on arbitrage trading… anyways -1 for me