A CFA follows the oil industry for company X. He has been assigned the task of reviewing two oil stocks currently in several of the firm’s portfolios. THe market is forecasting oil prices will increase by another 50% from their current level. Both Stock X and Stock Y are viewed as having the same sensitivity to oil. However, CFA’s research indicates that the price of X reflects only half of the prob of the an increase in oil prices as compared to Y. State the investment opp and the best strategy used. Situation Strategy Unconditional prob. Market Timing Trade Inconsistent prob. Pairs Arbitrage Trade Unconditional prob. Pairs Arbitrage Trade Inconsistent prob. Market Timing Trade
is it in the curriculum?
C…not sure at all
not sure if it is in the curriculum…the answer given is B