Question 1

A contrary opinion technician would buy stock when mutual funds

Accepted Answer

A) Are at the market peak 
B) Are fully invested 
C) Have a cash ratio approaching 4 percent 
D) Have a cash ratio approaching 11 percent 
E) None of the above 
A) Are at the market peak 
B) Are fully invested 
C) Have a cash ratio approaching 4 percent 
D) Have a cash ratio approaching 11 percent 
E) None of the above D

Question 2

The ratio of the price of a stock or an industry group to the value of the market index is called the

Accepted Answer

A) Company to market ratio. 
B) Composite stock ratio. 
C) Relational proportion ratio. 
D) Stock to market ratio. 
E) Relative strength ratio. 
A) Company to market ratio. 
B) Composite stock ratio. 
C) Relational proportion ratio. 
D) Stock to market ratio. 
E) Relative strength ratio. E

Question 3

Exhibit 15.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Daily closings for the Dow Jones Industrial Average are given in the table below.
  
-Refer to Exhibit 15.1. Calculate a 4-day moving average for day 5.

Accepted Answer

A) 10,102.3 
B) 9905.6 
C) 9875.4 
D) 10,215.7 
E) 10,157.6 
A) 10,102.3 
B) 9905.6 
C) 9875.4 
D) 10,215.7 
E) 10,157.6 D

Question 4

Which of the following statements is true?

Accepted Answer

A) At a support level, the technician would expect an increase in the demand for a stock. 
B) At a resistance level, the technician would expect an increase in the demand for a stock. 
C) At a resistance level, the technician would expect any price increase to reverse abruptly. 
D) Choices a and c 
E) All of the above 
A) At a support level, the technician would expect an increase in the demand for a stock. 
B) At a resistance level, the technician would expect an increase in the demand for a stock. 
C) At a resistance level, the technician would expect any price increase to reverse abruptly. 
D) Choices a and c 
E) All of the above

Question 5

The confidence index published by Barron's is the ratio of the average yield on 10 top grade corporate bonds to the

Accepted Answer

A) Average yield on 30 blue chip corporate stocks. 
B) Average yield on 40 convertible corporate bonds. 
C) Yield on U.S.Treasury bills. 
D) Yield on the Dow Jones average of 40 bonds. 
E) Yield on the Shearson Lehman Hutton Corporate Bond Index 
A) Average yield on 30 blue chip corporate stocks. 
B) Average yield on 40 convertible corporate bonds. 
C) Yield on U.S.Treasury bills. 
D) Yield on the Dow Jones average of 40 bonds. 
E) Yield on the Shearson Lehman Hutton Corporate Bond Index

Question 6

The market is considered to be overbought and subject to a negative correction when more than

Accepted Answer

A) 60% of the stocks are selling above their 90 day average. 
B) 70% of the stocks are selling above their 100 day average. 
C) 80% of the stocks are selling above their 200 day average. 
D) 70% of the stocks are selling above their 150 day average. 
E) 90% of the stocks are selling above their 150 day average. 
A) 60% of the stocks are selling above their 90 day average. 
B) 70% of the stocks are selling above their 100 day average. 
C) 80% of the stocks are selling above their 200 day average. 
D) 70% of the stocks are selling above their 150 day average. 
E) 90% of the stocks are selling above their 150 day average.

Question 7

An advantage of technical analysis over fundamental analysis is technical analysis

Accepted Answer

A) Has an increased amount of data that allows the analyst to process the information 
B) Can more thoroughly investigate accounting information 
C) Adjusts for differences in GAAP accounting procedures across the industry 
D) Can capture non-quantifiable variables such as psychological factors 
E) None of the above 
A) Has an increased amount of data that allows the analyst to process the information 
B) Can more thoroughly investigate accounting information 
C) Adjusts for differences in GAAP accounting procedures across the industry 
D) Can capture non-quantifiable variables such as psychological factors 
E) None of the above

Question 8

Contrary trading rules assert that investors tend to be wrong except at market peaks and troughs.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 15.2
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The table below provides five days of trade data.
  
-Refer to Exhibit 15.2. Calculate the net advance-decline for day 5.

Accepted Answer

A) -3,883 
B) 9,540 
C) -2,354 
D) 13,356 
E) 7,953 
A) -3,883 
B) 9,540 
C) -2,354 
D) 13,356 
E) 7,953

Question 10

A technical analyst would consider the following a strong buy signal:

Accepted Answer

A) A graph of declining prices ends in a trough followed by an upward trend that breaks through the declining trend channel. 
B) A graph of increasing prices ends in a peak followed by a downward trend that breaks through the rising trend channel. 
C) A graph begins to trade in a flat trend after it breaks out of its rising trend channel 
D) A graph begins to trade in a declining trend after it breaks out of its flat trend channel 
E) None of the above 
A) A graph of declining prices ends in a trough followed by an upward trend that breaks through the declining trend channel. 
B) A graph of increasing prices ends in a peak followed by a downward trend that breaks through the rising trend channel. 
C) A graph begins to trade in a flat trend after it breaks out of its rising trend channel 
D) A graph begins to trade in a declining trend after it breaks out of its flat trend channel 
E) None of the above

Question 11

The ratio of OTC volume versus NYSE volume is a measure of ____. This ratio typically ____ at a market ____.

Accepted Answer

A) Speculative activity, bottoms, peak. 
B) Hedging activity, bottoms, peak. 
C) Speculative activity, peaks, peak 
D) Speculative activity, bottoms, bottoms. 
E) None of the above. 
A) Speculative activity, bottoms, peak. 
B) Hedging activity, bottoms, peak. 
C) Speculative activity, peaks, peak 
D) Speculative activity, bottoms, bottoms. 
E) None of the above.

Question 12

Which of the following is not a technical trading rule category?

Accepted Answer

A) Contrary-opinion rules 
B) Follow the smart money rules 
C) Anti-fundamental and anti-portfolio approaches 
D) Stock price and volume techniques 
E) Other market environment indicators 
A) Contrary-opinion rules 
B) Follow the smart money rules 
C) Anti-fundamental and anti-portfolio approaches 
D) Stock price and volume techniques 
E) Other market environment indicators

Question 13

Technicians believe that an industry or stock that is outperforming the market will tend to

Accepted Answer

A) Continue to outperform the market. 
B) Return to normal. 
C) Reverse trend. 
D) Meet a resistance level. 
E) Form head and shoulder patterns. 
A) Continue to outperform the market. 
B) Return to normal. 
C) Reverse trend. 
D) Meet a resistance level. 
E) Form head and shoulder patterns.

Question 14

If 10 percent of the stocks are selling above their 200 day moving average, the market is considered to be oversold.

Accepted Answer

A) True 
 B)False

Question 15

A price range at which technicians would expect a substantial increase in the demand for a stock is called

Accepted Answer

A) Demand threshold. 
B) Resistance level. 
C) Support level. 
D) Resistance limit. 
E) Technical restraint. 
A) Demand threshold. 
B) Resistance level. 
C) Support level. 
D) Resistance limit. 
E) Technical restraint.

Question 16

For technical trading rules to generate returns that are superior to a buy-and-hold strategy, net of transaction costs, the market would have to be

Accepted Answer

A) Rising. 
B) Falling. 
C) Inefficient. 
D) Overvalued. 
E) Undervalued. 
A) Rising. 
B) Falling. 
C) Inefficient. 
D) Overvalued. 
E) Undervalued.

Question 17

Which of the following assumptions regarding price movements summarized by Levy (1966) are controversial?

Accepted Answer

A) Supply and demand determine the market value of any good or service. 
B) Supply and demand are governed by numerous rational and irrational factors. 
C) The prices for individual securities and the overall value of the market tend to move in trends. 
D) All of the above assumptions are controversial. 
E) None of the above assumptions are controversial. 
A) Supply and demand determine the market value of any good or service. 
B) Supply and demand are governed by numerous rational and irrational factors. 
C) The prices for individual securities and the overall value of the market tend to move in trends. 
D) All of the above assumptions are controversial. 
E) None of the above assumptions are controversial.

Question 18

A price range at which technicians feel that a significant increase in the price of the stock will be resisted is referred to as

Accepted Answer

A) Supply threshold. 
B) Support level. 
C) Short interest level. 
D) Advancement level. 
E) Resistance level. 
A) Supply threshold. 
B) Support level. 
C) Short interest level. 
D) Advancement level. 
E) Resistance level.

Question 19

A chart used to show only significant price changes, regardless of their timing, is the

Accepted Answer

A) Candlestick chart 
B) Multiple indicator chart 
C) Bar chart 
D) Point-and-figure chart 
E) Point-and-click chart 
A) Candlestick chart 
B) Multiple indicator chart 
C) Bar chart 
D) Point-and-figure chart 
E) Point-and-click chart

Question 20

A technical analyst might use credit balances in brokerage accounts as follows:

Accepted Answer

A) Sell stock when credit balances rise 
B) Buy stock when credit balances rise 
C) Sell stock when credit balances decline 
D) b and c 
E) None of the above 
A) Sell stock when credit balances rise 
B) Buy stock when credit balances rise 
C) Sell stock when credit balances decline 
D) b and c 
E) None of the above

Exam 15: Technical Analysis

A contrary opinion technician would buy stock when mutual funds

The ratio of the price of a stock or an industry group to the value of the market index is called the

Exhibit 15.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Daily closings for the Dow Jones Industrial Average are given in the table below. -Refer to Exhibit 15.1. Calculate a 4-day moving average for day 5.

Which of the following statements is true?

The confidence index published by Barron's is the ratio of the average yield on 10 top grade corporate bonds to the

The market is considered to be overbought and subject to a negative correction when more than

An advantage of technical analysis over fundamental analysis is technical analysis

Contrary trading rules assert that investors tend to be wrong except at market peaks and troughs.

Exhibit 15.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) The table below provides five days of trade data. -Refer to Exhibit 15.2. Calculate the net advance-decline for day 5.

A technical analyst would consider the following a strong buy signal:

The ratio of OTC volume versus NYSE volume is a measure of ____. This ratio typically ____ at a market ____.

Which of the following is not a technical trading rule category?

Technicians believe that an industry or stock that is outperforming the market will tend to

If 10 percent of the stocks are selling above their 200 day moving average, the market is considered to be oversold.

A price range at which technicians would expect a substantial increase in the demand for a stock is called

For technical trading rules to generate returns that are superior to a buy-and-hold strategy, net of transaction costs, the market would have to be

Which of the following assumptions regarding price movements summarized by Levy (1966) are controversial?

A price range at which technicians feel that a significant increase in the price of the stock will be resisted is referred to as

A chart used to show only significant price changes, regardless of their timing, is the

A technical analyst might use credit balances in brokerage accounts as follows:

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Organization and Functioning of Securities Markets

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Introduction to Security Valuation

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Strategies

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts, Convertible Securities, and Other Embedded Derivatives

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Filters

The ratio of OTC volume versus NYSE volume is a measure of . This ratio typically at a market .