Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The majority of technicians follows many trading rules and attempt to arrive at a consensus among their rules.

Accepted Answer

A) True 
 B)False

Question 3

For technical trading rules to consistently generate superior returns, the market would have to be inefficient.

Accepted Answer

A) True 
 B)False

Question 4

Empirical analysis suggests that trigger points for trading rules are relatively stable over time.

Accepted Answer

A) True 
 B)False

Question 5

If the 50-day moving average line crosses the 200-day moving average line from below on good volume, this would be a bullish signal.

Accepted Answer

A) True 
 B)False

Question 6

The breadth of the market measures the daily volume for a particular market.

Accepted Answer

A) True 
 B)False

Question 7

When the 50 day MA line crosses the 200 day MA line from above it is considered a buy signal.

Accepted Answer

A) True 
 B)False

Question 8

If the aggregate market is rising, but the breadth index is declining, it is a bearish signal.

Accepted Answer

A) True 
 B)False

Question 9

To a technician that believed in the importance of volume, a bullish signal would occur when

Accepted Answer

A) Prices increase on light volume. 
B) Prices decrease on light volume. 
C) Prices increase on heavy volume. 
D) Prices decrease on heavy volume. 
E) None of the above. 
A) Prices increase on light volume. 
B) Prices decrease on light volume. 
C) Prices increase on heavy volume. 
D) Prices decrease on heavy volume. 
E) None of the above.

Question 10

Analysts following what the smart, sophisticated investor is doing would examine

Accepted Answer

A) Mutual fund cash positions. 
B) Debit balances in brokerage houses. 
C) Investment advisory opinions. 
D) Breadth of market. 
E) Stocks above their 200 day moving average. 
A) Mutual fund cash positions. 
B) Debit balances in brokerage houses. 
C) Investment advisory opinions. 
D) Breadth of market. 
E) Stocks above their 200 day moving average.

Question 11

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 5-day moving average for day 6.

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

Question 12

Candlestick charts indicate the price change from open to close by shading whether the market went down or up for the day.

Accepted Answer

A) True 
 B)False

Question 13

Technical analysts feel that financial accounting statements lack information, or report it in a way that makes comparisons difficult. Which of the following does not constitute a problem?

Accepted Answer

A) Detailed information concerning sales and expenses by product line. 
B) Statements of change in financial position. 
C) Alternative ways of reporting expenses. 
D) Alternative ways of reporting assets and liabilities. 
E) The availability of psychological and nonquantitative variables. 
A) Detailed information concerning sales and expenses by product line. 
B) Statements of change in financial position. 
C) Alternative ways of reporting expenses. 
D) Alternative ways of reporting assets and liabilities. 
E) The availability of psychological and nonquantitative variables.

Question 14

A technical analyst would consider a put call ratio of ____ as a bearish indicator.

Accepted Answer

A) 30 percent 
B) 40 percent 
C) 50 percent 
D) 60 percent 
E) 70 percent 
A) 30 percent 
B) 40 percent 
C) 50 percent 
D) 60 percent 
E) 70 percent

Question 15

Based on the daily closings for the Dow Jones Industrial Average given in the table below, calculate a four-day moving average for Day 4.

Accepted Answer

A) 10,500 
B) 10,210 
C) 10,215 
D) 10,000 
E) 11,000 
A) 10,500 
B) 10,210 
C) 10,215 
D) 10,000 
E) 11,000

Question 16

A type of charting which normally disregards both time and volume is the

Accepted Answer

A) Bar chart. 
B) Point and figure chart. 
C) Pie chart. 
D) Histogram. 
E) A linear regression graph. 
A) Bar chart. 
B) Point and figure chart. 
C) Pie chart. 
D) Histogram. 
E) A linear regression graph.

Question 17

A technical analyst might consider the following a bearish signal.

Accepted Answer

A) The percentage of speculators in stock index futures exceeds 70%. 
B) The percentage of speculators in stock index futures exceeds 30%. 
C) The percentage of speculators in stock index futures falls to 30%. 
D) The percentage of speculators in stock index futures remains flat. 
E) None of the above. 
A) The percentage of speculators in stock index futures exceeds 70%. 
B) The percentage of speculators in stock index futures exceeds 30%. 
C) The percentage of speculators in stock index futures falls to 30%. 
D) The percentage of speculators in stock index futures remains flat. 
E) None of the above.

Question 18

One of the potential disadvantages of technical analysis is that it can lead to investing too early, even before fundamental analysts do.

Accepted Answer

A) True 
 B)False

Question 19

____ charts show time series of price while ____ charts only reflect change regardless of time.

Accepted Answer

A) Relative strength, bar 
B) Relative strength, advance/decline 
C) Point and bar, figure 
D) Bar, point and figure 
E) Bar, multiple indicator 
A) Relative strength, bar 
B) Relative strength, advance/decline 
C) Point and bar, figure 
D) Bar, point and figure 
E) Bar, multiple indicator

Question 20

The Dow Theory describes stock prices as moving in trends analogous to the movement of water. Which of the following statements is not true?

Accepted Answer

A) Major trends resemble tides. 
B) Intermediate trends resemble waves. 
C) Short-run movements are like ripples. 
D) Waves are the most important. 
E) None of the above (that is, all are true statements) 
A) Major trends resemble tides. 
B) Intermediate trends resemble waves. 
C) Short-run movements are like ripples. 
D) Waves are the most important. 
E) None of the above (that is, all are true statements)

Exam 15: Technical Analysis

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

The majority of technicians follows many trading rules and attempt to arrive at a consensus among their rules.

For technical trading rules to consistently generate superior returns, the market would have to be inefficient.

Empirical analysis suggests that trigger points for trading rules are relatively stable over time.

If the 50-day moving average line crosses the 200-day moving average line from below on good volume, this would be a bullish signal.

The breadth of the market measures the daily volume for a particular market.

When the 50 day MA line crosses the 200 day MA line from above it is considered a buy signal.

If the aggregate market is rising, but the breadth index is declining, it is a bearish signal.

To a technician that believed in the importance of volume, a bullish signal would occur when

Analysts following what the smart, sophisticated investor is doing would examine

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 5-day moving average for day 6.

Candlestick charts indicate the price change from open to close by shading whether the market went down or up for the day.

Technical analysts feel that financial accounting statements lack information, or report it in a way that makes comparisons difficult. Which of the following does not constitute a problem?

A technical analyst would consider a put call ratio of ____ as a bearish indicator.

Based on the daily closings for the Dow Jones Industrial Average given in the table below, calculate a four-day moving average for Day 4.

A type of charting which normally disregards both time and volume is the

A technical analyst might consider the following a bearish signal.

One of the potential disadvantages of technical analysis is that it can lead to investing too early, even before fundamental analysts do.

____ charts show time series of price while ____ charts only reflect change regardless of time.

The Dow Theory describes stock prices as moving in trends analogous to the movement of water. Which of the following statements is not true?

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

charts show time series of price while charts only reflect change regardless of time.