Question 1

If 10 percent of the stocks are selling above their 200 day moving average, the market is considered to be oversold.

Accepted Answer

A) True 
 B)False

Question 2

A technical analyst would consider the following a strong buy signal:

Accepted Answer

A) A graph of declining prices ends in a trough followed by an upward trend that breaks through the declining trend channel. 
B) A graph of increasing prices ends in a peak followed by a downward trend that breaks through the rising trend channel. 
C) A graph begins to trade in a flat trend after it breaks out of its rising trend channel 
D) A graph begins to trade in a declining trend after it breaks out of its flat trend channel 
E) None of the above 
A) A graph of declining prices ends in a trough followed by an upward trend that breaks through the declining trend channel. 
B) A graph of increasing prices ends in a peak followed by a downward trend that breaks through the rising trend channel. 
C) A graph begins to trade in a flat trend after it breaks out of its rising trend channel 
D) A graph begins to trade in a declining trend after it breaks out of its flat trend channel 
E) None of the above

Question 3

Technical analysts believe that security prices do not adjust rapidly.

Accepted Answer

A) True 
 B)False

Question 4

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. $$\begin{array} { c c } 
\text { Day } & \text { Price } \
\hline 1 & 10500 \
2 & 10025 \
3 & 10125 \
4 & 10210
\end{array}$$

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 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

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 10

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 11

Technicians using the confidence index published by Barrons to make investment decisions

Accepted Answer

A) Believe the ratio is a bullish indicator because during periods of high confidence investors will invest in higher quality bonds. 
B) Believe the ratio is a bearish indicator because during periods of high confidence investors will invest in higher quality bonds. 
C) Believe the ration is a bearish indicator because during periods of high confidence investors will invest in lower quality bonds. 
D) Believe the ration is a bullish indicator because during periods of high confidence investors will invest in lower quality bonds. 
E) None of the above. 
A) Believe the ratio is a bullish indicator because during periods of high confidence investors will invest in higher quality bonds. 
B) Believe the ratio is a bearish indicator because during periods of high confidence investors will invest in higher quality bonds. 
C) Believe the ration is a bearish indicator because during periods of high confidence investors will invest in lower quality bonds. 
D) Believe the ration is a bullish indicator because during periods of high confidence investors will invest in lower quality bonds. 
E) None of the above.

Question 12

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 13

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 14

A contrary opinion technician would buy stock when mutual funds

Accepted Answer

A) Are at the market peak 
B) Are fully invested 
C) Have a cash ratio approaching 4 percent 
D) Have a cash ratio approaching 11 percent 
E) None of the above 
A) Are at the market peak 
B) Are fully invested 
C) Have a cash ratio approaching 4 percent 
D) Have a cash ratio approaching 11 percent 
E) None of the above

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

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 17

The ratio of the price of a stock or an industry group to the value of the market index is called the

Accepted Answer

A) Company to market ratio. 
B) Composite stock ratio. 
C) Relational proportion ratio. 
D) Stock to market ratio. 
E) Relative strength ratio. 
A) Company to market ratio. 
B) Composite stock ratio. 
C) Relational proportion ratio. 
D) Stock to market ratio. 
E) Relative strength ratio.

Question 18

Calculate the net advance-decline for day 5 using the trade data in the table below. $$\begin{array}{l}
\begin{array} { c c c c r } &\text { Issues }\
\text { Day } & \text { Traded } & \text { Advances } & \text { Declines } & \text { Unchanged } \
\hline 1 & 32456 & 25698 & 6058 & 700 \
2 & 43013 & 24560 & 17210 & 1243 \
3 & 33124 & 20324 & 12378 & 422 \
4 & 32678 & 19867 & 11367 & 1444 \
5 & 31897 & 18678 & 12278 & 941
\end{array}
\end{array}$$

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 19

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 20

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.

Exam 15: Technical Analysis

If 10 percent of the stocks are selling above their 200 day moving average, the market is considered to be oversold.

A technical analyst would consider the following a strong buy signal:

Technical analysts believe that security prices do not adjust rapidly.

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. Day Price 1 10500 2 10025 3 10125 4 10210

A technical analyst might consider the following a bearish signal.

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

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

Advances and declines are associated with market

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.

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

Technicians using the confidence index published by Barrons to make investment decisions

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

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

A contrary opinion technician would buy stock when mutual funds

Technical analysis differs from fundamental analysis in that

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.

The ratio of the price of a stock or an industry group to the value of the market index is called the

Calculate the net advance-decline for day 5 using the trade data in the table below. Issues Day Traded Advances Declines Unchanged 1 32456 25698 6058 700 2 43013 24560 17210 1243 3 33124 20324 12378 422 4 32678 19867 11367 1444 5 31897 18678 12278 941

Indicators that tell what smart investors are doing include

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

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

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