Question 1

A high ratio of specialist short sales compared to exchange short sales is interpreted as bearish.

Accepted Answer

A) True 
 B)False  True

Question 2

A bar chart is used to demonstrate:

Accepted Answer

A) advances and declines of stock prices. 
B) high,low,and closing stock price on a daily basis. 
C) changes of two points or more. 
D) More than one of the above 
A) advances and declines of stock prices. 
B) high,low,and closing stock price on a daily basis. 
C) changes of two points or more. 
D) More than one of the above B

Question 3

A high short interest ratio is considered bullish.

Accepted Answer

A) True 
 B)False  True

Question 4

Technical analysis is based on all of the following assumptions except:

Accepted Answer

A) that market value is determined by the interaction of demand and supply. 
B) that stocks with strong earnings gains will outperform the market. 
C) the assumption that,though there are minor fluctuations in the market,stock prices tend to move in trends that persist for long periods of time. 
D) that shifts in demand and supply can be detected sooner or later. 
E) that reversals of trends are caused by shifts in demand and supply. 
A) that market value is determined by the interaction of demand and supply. 
B) that stocks with strong earnings gains will outperform the market. 
C) the assumption that,though there are minor fluctuations in the market,stock prices tend to move in trends that persist for long periods of time. 
D) that shifts in demand and supply can be detected sooner or later. 
E) that reversals of trends are caused by shifts in demand and supply.

Question 5

The support level is the stock price that generates new demand,while the resistance level is the price at which investors begin to sell in order to take a profit.

Accepted Answer

A) True 
 B)False

Question 6

The Barron's Confidence Index is used to observe the trading pattern of investors in the stock market.

Accepted Answer

A) True 
 B)False

Question 7

______________ analysis focuses on charts and graphs based on internal market data,while _____________ analysis emphasizes earnings reports,management capabilities,and new product development.

Accepted Answer

A) Technical;fundamental 
B) Fundamental;technical 
C) Technical;external 
D) Technical;semi-strong 
A) Technical;fundamental 
B) Fundamental;technical 
C) Technical;external 
D) Technical;semi-strong

Question 8

Contrary opinion rules or approaches to the market include:

Accepted Answer

A) the odd-lot theory. 
B) short sales positions by the public. 
C) the mutual fund cash position. 
D) A and B 
A) the odd-lot theory. 
B) short sales positions by the public. 
C) the mutual fund cash position. 
D) A and B

Question 9

The breadth of the market indicator:

Accepted Answer

A) attempts to measure what a broad range of securities is doing as opposed to merely examining a market average. 
B) can be used to analyze upturns in the market. 
C) compares the advance-declines with the movement of a popular market average to determine if there is divergence between the two. 
D) All of the above 
A) attempts to measure what a broad range of securities is doing as opposed to merely examining a market average. 
B) can be used to analyze upturns in the market. 
C) compares the advance-declines with the movement of a popular market average to determine if there is divergence between the two. 
D) All of the above

Question 10

Volume of short sales represents a contrary opinion rule,because:

Accepted Answer

A) short sellers generally do not know what they are doing. 
B) short sellers tend to overreact. 
C) short sales generate potential demand for stocks. 
D) More than one of the above 
A) short sellers generally do not know what they are doing. 
B) short sellers tend to overreact. 
C) short sales generate potential demand for stocks. 
D) More than one of the above

Question 11

High mutual fund cash positions would represent withdrawal from the market and thus a possible future market decline.

Accepted Answer

A) True 
 B)False

Question 12

Under normal circumstances,the Barron's Confidence Index is between 100 and 200.

Accepted Answer

A) True 
 B)False

Question 13

The Dow Theory maintains that there are three major fluctuations in the market: daily fluctuations,weekly fluctuations,and yearly fluctuations.

Accepted Answer

A) True 
 B)False

Question 14

The Dow Theory puts emphasis on long-run trends.

Accepted Answer

A) True 
 B)False

Question 15

The higher the mutual fund cash position,

Accepted Answer

A) the more likely the market is to go down. 
B) the more likely the market is to go up. 
C) the more likely the market is to stay relatively unchanged. 
D) the higher mutual fund redemptions will be in the future. 
A) the more likely the market is to go down. 
B) the more likely the market is to go up. 
C) the more likely the market is to stay relatively unchanged. 
D) the higher mutual fund redemptions will be in the future.

Question 16

Point and figure charts emphasize significant price changes and price reversals.

Accepted Answer

A) True 
 B)False

Question 17

Smart Money Rules include:

Accepted Answer

A) Barron's Confidence Index. 
B) short sales by individuals. 
C) short sales by specialists. 
D) Both A and C 
A) Barron's Confidence Index. 
B) short sales by individuals. 
C) short sales by specialists. 
D) Both A and C

Question 18

A ratio of the total short sales positions on an exchange to average daily exchange volume for the month is normally

Accepted Answer

A) between 0-.5 
B) between 1.0-2.0 
C) between 2.0-3.0 
D) over 3.0 
A) between 0-.5 
B) between 1.0-2.0 
C) between 2.0-3.0 
D) over 3.0

Question 19

Technical analysis assumes that many chart patterns tend to repeat themselves.

Accepted Answer

A) True 
 B)False

Question 20

Smart money rules or approaches to the market include:

Accepted Answer

A) short sales by specialists. 
B) the put-call ratio. 
C) Investment Advisory recommendations. 
D) the odd-lot theory. 
A) short sales by specialists. 
B) the put-call ratio. 
C) Investment Advisory recommendations. 
D) the odd-lot theory.

Exam 9: Behavioral Finance and Technical Analysis

A high ratio of specialist short sales compared to exchange short sales is interpreted as bearish.

A bar chart is used to demonstrate:

A high short interest ratio is considered bullish.

Technical analysis is based on all of the following assumptions except:

The support level is the stock price that generates new demand,while the resistance level is the price at which investors begin to sell in order to take a profit.

The Barron's Confidence Index is used to observe the trading pattern of investors in the stock market.

______________ analysis focuses on charts and graphs based on internal market data,while _____________ analysis emphasizes earnings reports,management capabilities,and new product development.

Contrary opinion rules or approaches to the market include:

The breadth of the market indicator:

Volume of short sales represents a contrary opinion rule,because:

High mutual fund cash positions would represent withdrawal from the market and thus a possible future market decline.

Under normal circumstances,the Barron's Confidence Index is between 100 and 200.

The Dow Theory maintains that there are three major fluctuations in the market: daily fluctuations,weekly fluctuations,and yearly fluctuations.

The Dow Theory puts emphasis on long-run trends.

The higher the mutual fund cash position,

Point and figure charts emphasize significant price changes and price reversals.

Smart Money Rules include:

A ratio of the total short sales positions on an exchange to average daily exchange volume for the month is normally

Technical analysis assumes that many chart patterns tend to repeat themselves.

Smart money rules or approaches to the market include:

The Investment Setting

Security Markets

Participating in the Market

Investment Companies: Mutual Funds, exchange-Traded Funds, closed-End Funds, and Unit Investment Trusts

Economic Activity

Industry Analysis

Financial Statement Analysis

Efficient Markets and Anomalies

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

International Securities Markets

Investments in Real Assets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

a Comprehensive Analysis for Real Estate Investment Decisions

the Makeup of Institutional Investors

Filters

__ analysis focuses on charts and graphs based on internal market data,while _ analysis emphasizes earnings reports,management capabilities,and new product development.