Question 1

A rise in the Confidence Index published by Barron's is an indication investors will purchase more lower-quality bonds.

Accepted Answer

A) True 
 B)False

Question 2

The use of trading rules requires a great deal of subjective judgment.

Accepted Answer

A) True 
 B)False

Question 3

A divergence between an increase in a stock market series and the rest of the stock market can be detected using

Accepted Answer

A) Debit balances in brokerage accounts 
B) Short interest 
C) The advance-decline line 
D) Confidence index 
E) None of the above 
A) Debit balances in brokerage accounts 
B) Short interest 
C) The advance-decline line 
D) Confidence index 
E) None of the above

Question 4

Advances and declines are associated with market

Accepted Answer

A) Efficiency. 
B) Position. 
C) Diffusion. 
D) Depth. 
E) Breadth. 
A) Efficiency. 
B) Position. 
C) Diffusion. 
D) Depth. 
E) Breadth.

Question 5

An increase in debit balances in brokerage accounts is viewed by technicians as a bullish sign.

Accepted Answer

A) True 
 B)False

Question 6

When the 50 day moving average crosses the 200 day moving average from ____ on ____ volume, this would be a ____ signal.

Accepted Answer

A) Above, low, bullish. 
B) below, high, bearish. 
C) below, low, bullish. 
D) above, high, bullish. 
E) below, high, bullish. 
A) Above, low, bullish. 
B) below, high, bearish. 
C) below, low, bullish. 
D) above, high, bullish. 
E) below, high, bullish.

Question 7

A technical analyst might consider the following as a bearish signal

Accepted Answer

A) Investment advisory opinion is bearish 
B) Investment advisory opinion is bullish 
C) CBOE put-call ratio above 0.60 
D) CBOE put-call ratio below 0.40 
E) b and d 
A) Investment advisory opinion is bearish 
B) Investment advisory opinion is bullish 
C) CBOE put-call ratio above 0.60 
D) CBOE put-call ratio below 0.40 
E) b and d

Question 8

Two major classes of technicians include the contrarians and those who "follow the smart money".

Accepted Answer

A) True 
 B)False

Question 9

A support level is the price range at which the technician would expect an increase in the supply of stock and a price reversal.

Accepted Answer

A) True 
 B)False

Question 10

Indicators that tell what smart investors are doing include

Accepted Answer

A) The put/call ratio. 
B) Mutual fund cash position. 
C) The Dow theory. 
D) Short sales by specialists. 
E) Head and tail indicator. 
A) The put/call ratio. 
B) Mutual fund cash position. 
C) The Dow theory. 
D) Short sales by specialists. 
E) Head and tail indicator.

Question 11

In examining the properties of world market currencies or the spreads between currencies, an analyst is most likely to use time series properties to determine all the following, except

Accepted Answer

A) Volatility. 
B) Overbought condition. 
C) Resistance-support levels. 
D) Trend. 
E) An oversold condition. 
A) Volatility. 
B) Overbought condition. 
C) Resistance-support levels. 
D) Trend. 
E) An oversold condition.

Question 12

An increase in debit balances means more investing by naive investors and would be a bearish indicator.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not considered an assumption of technical analysis?

Accepted Answer

A) Market value is determined solely by supply and demand. 
B) Supply and demand are governed by both rational and irrational factors. 
C) Security prices tend to move in trends that persist for an appreciable length of time. 
D) Stock prices follow a random walk. 
E) Changes in trend are caused by the shifts in supply and demand relationships. 
A) Market value is determined solely by supply and demand. 
B) Supply and demand are governed by both rational and irrational factors. 
C) Security prices tend to move in trends that persist for an appreciable length of time. 
D) Stock prices follow a random walk. 
E) Changes in trend are caused by the shifts in supply and demand relationships.

Question 14

When ____ of stocks are trading above the 200-day moving average, the market is considered ____, and subject to a ____.

Accepted Answer

A) 20%, oversold, negative correction 
B) 80%, overbought, negative correction 
C) 80%, oversold, positive correction 
D) 20%, overbought, positive correction 
E) None of the above 
A) 20%, oversold, negative correction 
B) 80%, overbought, negative correction 
C) 80%, oversold, positive correction 
D) 20%, overbought, positive correction 
E) None of the above

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

A narrowing of the T-bill-Eurodollar and ____ signal, because ____.

Accepted Answer

A) Bearish, it signals falling investor confidence 
B) Bullish, it signal rising investor confidence 
C) Bearish, it signals a flight to quality 
D) Bullish, it signals a flight to quality 
E) b and d 
A) Bearish, it signals falling investor confidence 
B) Bullish, it signal rising investor confidence 
C) Bearish, it signals a flight to quality 
D) Bullish, it signals a flight to quality 
E) b and d

Question 17

The Dow theory contends that stock price movements are similar to the movement of tides, waves, and ripples.

Accepted Answer

A) True 
 B)False

Question 18

A technical analyst might use mutual fund cash positions as follows:

Accepted Answer

A) Sell stock when cash levels are low 
B) Buy stock when cash levels are low 
C) Sell stock when cash levels are high 
D) b and c 
E) a and b 
A) Sell stock when cash levels are low 
B) Buy stock when cash levels are low 
C) Sell stock when cash levels are high 
D) b and c 
E) a and b

Question 19

Technicians believe, when the relative strength index is stable or ____, during a ____ market, the stock should do well during a ____ market.

Accepted Answer

A) Decreases, bull, bear. 
B) Increases, bear, bull. 
C) Decreases, bear, bull. 
D) Increases, bull, bear. 
E) None of the above. 
A) Decreases, bull, bear. 
B) Increases, bear, bull. 
C) Decreases, bear, bull. 
D) Increases, bull, bear. 
E) None of the above.

Question 20

Given the following three days of data, compute the daily net advance-decline line and cumulative advance-decline line for each day. What is the final value at the end of the third day?

Accepted Answer

A) 5,000 
B) 9,270 
C) 12,500 
D) 13,250 
E) 11,667 
A) 5,000 
B) 9,270 
C) 12,500 
D) 13,250 
E) 11,667

Exam 15: Technical Analysis

A rise in the Confidence Index published by Barron's is an indication investors will purchase more lower-quality bonds.

The use of trading rules requires a great deal of subjective judgment.

A divergence between an increase in a stock market series and the rest of the stock market can be detected using

Advances and declines are associated with market

An increase in debit balances in brokerage accounts is viewed by technicians as a bullish sign.

When the 50 day moving average crosses the 200 day moving average from ____ on ____ volume, this would be a ____ signal.

A technical analyst might consider the following as a bearish signal

Two major classes of technicians include the contrarians and those who "follow the smart money".

A support level is the price range at which the technician would expect an increase in the supply of stock and a price reversal.

Indicators that tell what smart investors are doing include

In examining the properties of world market currencies or the spreads between currencies, an analyst is most likely to use time series properties to determine all the following, except

An increase in debit balances means more investing by naive investors and would be a bearish indicator.

Which of the following is not considered an assumption of technical analysis?

When ____ of stocks are trading above the 200-day moving average, the market is considered ____, and subject to a ____.

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

A narrowing of the T-bill-Eurodollar and ____ signal, because ____.

The Dow theory contends that stock price movements are similar to the movement of tides, waves, and ripples.

A technical analyst might use mutual fund cash positions as follows:

Technicians believe, when the relative strength index is stable or ____, during a ____ market, the stock should do well during a ____ market.

Given the following three days of data, compute the daily net advance-decline line and cumulative advance-decline line for each day. What is the final value at the end of the third day?

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

When the 50 day moving average crosses the 200 day moving average from on volume, this would be a signal.

When of stocks are trading above the 200-day moving average, the market is considered , and subject to a .

A narrowing of the T-bill-Eurodollar and signal, because .

Technicians believe, when the relative strength index is stable or , during a market, the stock should do well during a market.