Question 1

Fundamentalists contend that past price movements will indicate future price movements.

Accepted Answer

A) True 
 B)False

Question 2

The confidence index increases as the yield on lower grade bonds decreases, everything else being constant.

Accepted Answer

A) True 
 B)False

Question 3

When the 50-day moving average crosses the 200-day moving average from below on good volume

Accepted Answer

A) This would be a bearish indicator because it signals a change to a negative trend. 
B) This would be a bullish indicator because it signals a change to a negative trend. 
C) This would be a bullish indicator because it signals a change to a positive trend. 
D) This would be a bearish indicator because it signals a change to a positive trend. 
E) None of the above. 
A) This would be a bearish indicator because it signals a change to a negative trend. 
B) This would be a bullish indicator because it signals a change to a negative trend. 
C) This would be a bullish indicator because it signals a change to a positive trend. 
D) This would be a bearish indicator because it signals a change to a positive trend. 
E) None of the above.

Question 4

The cumulative number of shares that have been sold short by investors and not covered is called

Accepted Answer

A) Margin interest. 
B) Short interest. 
C) Short ratio. 
D) Short/long ratio. 
E) Naked short ratio. 
A) Margin interest. 
B) Short interest. 
C) Short ratio. 
D) Short/long ratio. 
E) Naked short ratio.

Question 5

Calculate the net advance-decline for day 5 using the trade data in the table below.

Accepted Answer

A) -5,459 
B) 941 
C) 5,459 
D) 6,400 
E) 7,853 
A) -5,459 
B) 941 
C) 5,459 
D) 6,400 
E) 7,853

Question 6

The relative strength index for a stock is equal to the price of the stock

Accepted Answer

A) Divided by the value of a stock-market index. 
B) Multiplied by the value of a stock-market index. 
C) Divided by the value of a group of industry stocks. 
D) Multiplied by an industry peer group and divided by a market index. 
E) Divided by the 30 day moving average of prior stock movements. 
A) Divided by the value of a stock-market index. 
B) Multiplied by the value of a stock-market index. 
C) Divided by the value of a group of industry stocks. 
D) Multiplied by an industry peer group and divided by a market index. 
E) Divided by the 30 day moving average of prior stock movements.

Question 7

The following are classified as contrary trading rules, except the

Accepted Answer

A) Odd lot short sales. 
B) Investment advisory opinions. 
C) Relative OTC volume. 
D) CBOE put/call ratio. 
E) Confidence index. 
A) Odd lot short sales. 
B) Investment advisory opinions. 
C) Relative OTC volume. 
D) CBOE put/call ratio. 
E) Confidence index.

Question 8

Daily closing for the Dow Jones Industrial Average are provided in the table below.   Calculate a 5-day moving average for day 6.

Accepted Answer

A) 11,397 
B) 13,565 
C) 13,594 
D) 13,647 
E) 13,676 
A) 11,397 
B) 13,565 
C) 13,594 
D) 13,647 
E) 13,676

Question 9

Which of the following is not considered a contrary trading rules?

Accepted Answer

A) Futures traders bullish on stock index futures 
B) Investment advisory opinions 
C) Credit balance in brokerage accounts 
D) CBOE put/call ratio 
E) Confidence index 
A) Futures traders bullish on stock index futures 
B) Investment advisory opinions 
C) Credit balance in brokerage accounts 
D) CBOE put/call ratio 
E) Confidence index

Question 10

Most technicians feel that since price patterns repeat themselves, a single trading rule is sufficient.

Accepted Answer

A) True 
 B)False

Question 11

The T-Bill-Eurodollar yield spread widens during periods of international crisis.

Accepted Answer

A) True 
 B)False

Question 12

The relative strength ratio for a stock can be computed by dividing the value of the S&P 500 stock index by the price of a stock.

Accepted Answer

A) True 
 B)False

Question 13

If a technical trading rule is successful, more traders use it, causing the rule to become even more successful.

Accepted Answer

A) True 
 B)False

Question 14

The short interest ratio is the ratio between the number of shares sold short and not covered, and the

Accepted Answer

A) Average number of stocks reaching new highs. 
B) Average daily number of stocks that increased in value. 
C) Average daily volume of trading on the exchange. 
D) Average monthly volume of trading on the exchange. 
E) Average number of shares outstanding in those stocks. 
A) Average number of stocks reaching new highs. 
B) Average daily number of stocks that increased in value. 
C) Average daily volume of trading on the exchange. 
D) Average monthly volume of trading on the exchange. 
E) Average number of shares outstanding in those stocks.

Question 15

Technical analysis differs from fundamental analysis in that

Accepted Answer

A) Technical analysts contend that in-depth assessments of basic aggregate market, industry, and company performance is necessary; past price movements indicate future price movements. 
B) Technical analysts believe the market value of common stocks is determined by the interaction of supply and demand. 
C) Technical analysts argue that the market constantly weighs rational and irrational factors and that both of these affect price. 
D) Technical analysts depend far more heavily on objective, data-based approaches than the fundamentalists do. 
E) Technical analysts hold that the price of a security is determined by an expected return risk. 
A) Technical analysts contend that in-depth assessments of basic aggregate market, industry, and company performance is necessary; past price movements indicate future price movements. 
B) Technical analysts believe the market value of common stocks is determined by the interaction of supply and demand. 
C) Technical analysts argue that the market constantly weighs rational and irrational factors and that both of these affect price. 
D) Technical analysts depend far more heavily on objective, data-based approaches than the fundamentalists do. 
E) Technical analysts hold that the price of a security is determined by an expected return risk.

Question 16

Technical analysts believe that security prices do not adjust rapidly.

Accepted Answer

A) True 
 B)False

Question 17

According to technical analysts using mutual fund cash positions to guide investment decisions

Accepted Answer

A) A low cash ratio position is a bullish indicator. 
B) A high cash position is a bullish indicator. 
C) A high cash position is a bearish indicator. 
D) A low cash position is neither bearish nor bullish. 
E) None of the above. 
A) A low cash ratio position is a bullish indicator. 
B) A high cash position is a bullish indicator. 
C) A high cash position is a bearish indicator. 
D) A low cash position is neither bearish nor bullish. 
E) None of the above.

Question 18

A high put/call ratio indicates a pervasive bearish attitude by sophisticated investors so it is a bearish indicator.

Accepted Answer

A) True 
 B)False

Question 19

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 final value of the cumulative advance-decline line at the end of the fifth day.

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 20

According to contrary opinion technicians, the ratio of mutual funds cash to total assets ____ near troughs in the market cycle and ____ near peaks.

Accepted Answer

A) Level out, spikes 
B) Remains low, remains high 
C) Is published near, is not published 
D) Increases, decreases 
E) Decreases, increases 
A) Level out, spikes 
B) Remains low, remains high 
C) Is published near, is not published 
D) Increases, decreases 
E) Decreases, increases

Exam 15: Technical Analysis

Fundamentalists contend that past price movements will indicate future price movements.

The confidence index increases as the yield on lower grade bonds decreases, everything else being constant.

When the 50-day moving average crosses the 200-day moving average from below on good volume

The cumulative number of shares that have been sold short by investors and not covered is called

Calculate the net advance-decline for day 5 using the trade data in the table below.

The relative strength index for a stock is equal to the price of the stock

The following are classified as contrary trading rules, except the

Daily closing for the Dow Jones Industrial Average are provided in the table below. Calculate a 5-day moving average for day 6.

Which of the following is not considered a contrary trading rules?

Most technicians feel that since price patterns repeat themselves, a single trading rule is sufficient.

The T-Bill-Eurodollar yield spread widens during periods of international crisis.

The relative strength ratio for a stock can be computed by dividing the value of the S&P 500 stock index by the price of a stock.

If a technical trading rule is successful, more traders use it, causing the rule to become even more successful.

The short interest ratio is the ratio between the number of shares sold short and not covered, and the

Technical analysis differs from fundamental analysis in that

Technical analysts believe that security prices do not adjust rapidly.

According to technical analysts using mutual fund cash positions to guide investment decisions

A high put/call ratio indicates a pervasive bearish attitude by sophisticated investors so it is a bearish indicator.

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 final value of the cumulative advance-decline line at the end of the fifth day.

According to contrary opinion technicians, the ratio of mutual funds cash to total assets ____ near troughs in the market cycle and ____ near peaks.

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

According to contrary opinion technicians, the ratio of mutual funds cash to total assets near troughs in the market cycle and near peaks.