Skip to content

CMA Intermediate · Financial Management and Business Data Analytics · Capital Market

A data analyst at a brokerage studies daily trade records to detect possible insider trading ahead of company announcements, in line with SEBI's surveillance objectives. Which analytical approach best fits spotting unusual trades that deviate sharply from a stock's normal pattern?

Outlier or anomaly detection on trading volume and price changes is the best approach, because it flags trades that deviate sharply from a stock's normal behaviour before announcements. Simple averages, pie charts and alphabetical sorting do not reveal such unusual patterns.

  1. AOutlier or anomaly detection on trading volume and price changesCorrect
  2. BComputing the simple average of closing prices only
  3. CDrawing a pie chart of the brokerage's client names
  4. DSorting trades alphabetically by stock symbol

Explanation

Anomaly detection flags observations that deviate strongly from typical volume or price behaviour, which suits surveillance of suspicious trades. A simple average hides unusual spikes, and pie charts or alphabetical sorting do not identify deviations.

Did you get it right without looking?

One question tells you little. A timed set on Capital Market shows your real accuracy, how long you take and where you lose marks.

Practise Capital MarketFree diagnostic mock

More Capital Market questions