easy · Market Microstructure mmf-core
A fundamental analyst correctly predicts a company's earnings beat and buys shares at $20.00. A noise trader also buys shares at $20.00 just for fun. Both sell at $22.00.
Who provided the 'compensation' for the profits of the informed analyst?
- The company whose earnings improved.
- There is no 'loss' because the stock value increased.
- The noise trader and other uninformed participants.
- The exchange where the trade occurred.
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