Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Most technicians feel that since price patterns repeat themselves,a single trading rule is sufficient.

Accepted Answer

A) True 
 B)False

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.

Question 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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?
                    $\text { Issues }$
$\begin{array}{ccccc}
\text { Day } & \text { Traded } & \text { Advances } & \text { Declines } & \text { Unchanged } \
\hline 1 & 8540 & 6500 & 1500 & 540 \
2 & 7535 & 5500 & 1230 & 805 \
3 & 6545 & 4554 & 1324 & 667
\end{array}$

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

Question 8

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 9

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 10

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 11

Technicians consider a high short interest ratio to be bearish.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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.

Question 14

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 15

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 16

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 17

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 18

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

Question 19

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 20

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.

Exam 16: Technical Analysis

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

Most technicians feel that since price patterns repeat themselves,a single trading rule is sufficient.

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

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

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

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

A contrary opinion technician would buy stock when mutual funds

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

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

Technicians consider a high short interest ratio to be bearish.

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

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

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

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

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

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

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

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.

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?

An Overview of the Investment Process

The Asset Allocation Decision

The Global Market Investment Decision

Securities Markets: Organization and Operation

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

Security Valuation Principles

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Stragtegies

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

Investment Return and Risk Analysis Questions

Investment and Retirement Plans

Calculating Covariance and Correlation Coefficient of Assets

Portfolio Variance and Stock Weight Calculations

Portfolio Optimization with Negative Correlation: Finding Minimum Variance and Weight Allocation

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