Question 1

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 D

Question 2

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. C

Question 3

Which of the following is not an advantage of technical analysis identified by technicians?

Accepted Answer

A) Fundamental analysis depends heavily on financial accounting statements. 
B) The majority of investors cannot consistently process new information correctly. 
C) Fundamental analysis may not time the investment properly when trading under- or over-valued securities. 
D) The majority of investors cannot process new information quickly enough. 
E) All of the above are advantages identified by technicians. 
A) Fundamental analysis depends heavily on financial accounting statements. 
B) The majority of investors cannot consistently process new information correctly. 
C) Fundamental analysis may not time the investment properly when trading under- or over-valued securities. 
D) The majority of investors cannot process new information quickly enough. 
E) All of the above are advantages identified by technicians. E

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

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

Question 8

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 9

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. $$\begin{array} { c r } 
\text { Day } & \text { Price } \
\hline 1 & 9867 \
2 & 10025 \
3 & 10524 \
4 & 10210 \
5 & 10104 \
6 & 9925
\end{array}$$
-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

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

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 12

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)

Question 13

Exhibit 15.2
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The table below provides five days of trade data. $$\begin{array}{l}
\begin{array} { c c c c c } &
\text { Issues }\
\text { Day } & \text { Traded } & \text { Advances } & \text { Declines } & \text { Unchanged } \
\hline 1 & 22456 & 15698 & 6158 & 600 \
2 & 23013 & 14560 & 8210 & 243 \
3 & 23124 & 10324 & 12678 & 122 \
4 & 22678 & 9867 & 11567 & 1244 \
5 & 21897 & 8678 & 12561 & 658
\end{array}
\end{array}$$
-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 14

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 15

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 16

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. $$\begin{array} { c r } 
\text { Day } & \text { Price } \
\hline 1 & 9867 \
2 & 10025 \
3 & 10524 \
4 & 10210 \
5 & 10104 \
6 & 9925
\end{array}$$
-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 17

Daily closing for the Dow Jones Industrial Average are provided in the table below. $$\begin{array} { c c } 
\text { Day } & \text { DJIA } \
\hline 1 & 13,500 \
2 & 13,395 \
3 & 13,505 \
4 & 13,750 \
5 & 13,820 \
6 & 13,910
\end{array}$$ 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 18

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 19

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 20

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

Exam 15: Technical Analysis

Which of the following statements is true?

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

Which of the following is not an advantage of technical analysis identified by technicians?

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

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

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

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

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

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. Day Price 1 9867 2 10025 3 10524 4 10210 5 10104 6 9925 -Refer to Exhibit 15.1. Calculate a 4-day moving average for day 5.

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

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

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

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

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

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. Day Price 1 9867 2 10025 3 10524 4 10210 5 10104 6 9925 -Refer to Exhibit 15.1. Calculate a 5-day moving average for day 6.

Daily closing for the Dow Jones Industrial Average are provided in the table below. Day DJIA 1 13,500 2 13,395 3 13,505 4 13,750 5 13,820 6 13,910 Calculate a 5-day moving average for day 6.

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

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

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

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.

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

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