Question

Please provide the explanation for the answer if possible? Thank you.

Assume that you find an inefficiency in the market and a strategy to exploit it to make "excess" returns for yourself. Under which of the following conditions is that inefficiency likely to generate long standing profits? (3 points) 9. a If the inefficiency is difficult to spot and the trading strategy you use is b. If the inefficiency is difficult to spot and the trading strategy you use is c If the inefficiency is easy to spot and the trading strategy you use is d. If the inefficiency is easy to spot and the trading strategy you use is transparent complex transparent. complex

Answer 1

Option B is correct.

If the inefficiency is difficult to spot and the trading strategy you use is complex.

Explanation:

A trading strategy works only upto the time when most of the market participants are not taking advantage of that, as when more and more people start exploiting a particular strategy then it's edge vanishes. So if an inefficiency is difficult to spot and trading strategy is complex it will generate a long standing profit.