Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

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 4

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 5

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 6

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 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

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 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

Technicians consider a high short interest ratio to be bearish.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

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 20

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

Exam 15: Technical Analysis

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

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

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

An advantage of technical analysis over fundamental analysis is technical analysis

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

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

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

The following are classified as contrary trading rules, except the

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

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

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

Technicians consider a high short interest ratio to be bearish.

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

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

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

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

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

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

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

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

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

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