Question 1

What are support and resistance levels?

Accepted Answer

If a stock price is falling,a support le

Question 2

Which of the following is not true regarding the Dow Theory?

Accepted Answer

A) It is intended to forecast the start of a primary movement. 
B) It does not forecast how long a movement will last. 
C) It has a very high success rate. 
D) It is subject to many criticisms. 
A) It is intended to forecast the start of a primary movement. 
B) It does not forecast how long a movement will last. 
C) It has a very high success rate. 
D) It is subject to many criticisms.

Question 3

Discuss the difference in beliefs about price adjustments toward equilibrium in technical analysis and the Efficient Market Hypothesis.

Accepted Answer

Technical analysis depends on

Question 4

One rule of thumb is that a stock is attractive when the relative strength has improved for at least ---------------months.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 5

The two primary tools of a technical analyst are:

Accepted Answer

A) level of the market index and volume. 
B) economic indicators and level of the market index. 
C) price and earnings. 
D) price and volume. 
A) level of the market index and volume. 
B) economic indicators and level of the market index. 
C) price and earnings. 
D) price and volume.

Question 6

Institutional investors are often considered to have the "smart money," while small,individual investors are not so well informed about the market.Which two sentiment indicators treat both institutions and individuals alike?

Accepted Answer

The odd-lot theory asserts that one shou

Question 7

Technicians that utilize the CBOE put/call ratio generally believe:

Accepted Answer

A) option investors are almost consistent losers. 
B) option investors are almost consistent winners. 
C) option investors are true technicians. 
D) option investors possess inside information. 
A) option investors are almost consistent losers. 
B) option investors are almost consistent winners. 
C) option investors are true technicians. 
D) option investors possess inside information.

Question 8

A put/call ratio of .70 indicates:

Accepted Answer

A) puts have a cost 70% less than the cost of calls. 
B) there are 7 puts purchased for every one call purchased. 
C) there are 70% more puts purchased than calls. 
D) there are 7 puts purchased for every 10 calls purchased. 
A) puts have a cost 70% less than the cost of calls. 
B) there are 7 puts purchased for every one call purchased. 
C) there are 70% more puts purchased than calls. 
D) there are 7 puts purchased for every 10 calls purchased.

Question 9

If a trading rule has been tried on data other than that used to produce the rule and found to be accurate,this is known as:

Accepted Answer

A) consistency. 
B) relative strength. 
C) out-of-sample validity. 
D) a filter rule. 
A) consistency. 
B) relative strength. 
C) out-of-sample validity. 
D) a filter rule.

Question 10

Which of the following is not one of the three major variables to be decided by the investor in order to construct a moving average?

Accepted Answer

A) price. 
B) time period. 
C) weight to be used. 
D) type of moving average to be constructed. 
A) price. 
B) time period. 
C) weight to be used. 
D) type of moving average to be constructed.

Question 11

The Dow theory is intended to forecast the start but not the duration of a primary movement.

Accepted Answer

A) True 
 B)False

Question 12

The breadth of the market is typically measured by which of the following:

Accepted Answer

A) 200-day moving average. 
B) 50-day moving average. 
C) the put-call ratio. 
D) the advance-decline line. 
A) 200-day moving average. 
B) 50-day moving average. 
C) the put-call ratio. 
D) the advance-decline line.

Question 13

Which of the following is true regarding the resistance level?

Accepted Answer

A) Resistance levels tend to develop due to profit taking. 
B) It is the level at which a significant decrease in demand is expected. 
C) It is the level at which a significant increase in supply is expected. 
D) Resistance levels usually develop after a stock reaches a new low. 
A) Resistance levels tend to develop due to profit taking. 
B) It is the level at which a significant decrease in demand is expected. 
C) It is the level at which a significant increase in supply is expected. 
D) Resistance levels usually develop after a stock reaches a new low.

Question 14

Fama and Blume (1969)tested 24 filters ranging from 0.50% to 50% on each of the 30 DJIA stocks.Among the tested filters:

Accepted Answer

A) several were profitable before commissions but not after. 
B) several were profitable before and after commissions. 
C) none were profitable even before commissions. 
D) all were profitable before commissions but not after. 
A) several were profitable before commissions but not after. 
B) several were profitable before and after commissions. 
C) none were profitable even before commissions. 
D) all were profitable before commissions but not after.

Question 15

The oldest approach to common stock selection is:

Accepted Answer

A) technical analysis 
B) fundamental analysis 
C) stochastic analysis 
D) value analysis 
A) technical analysis 
B) fundamental analysis 
C) stochastic analysis 
D) value analysis

Question 16

What do technical analysts believe is the best source of data to use in analyzing stocks?:

Accepted Answer

A) Corporate earnings growth prospects. 
B) Insider buying and selling of shares. 
C) Current P/E ratios versus historical ratios. 
D) The market itself. 
A) Corporate earnings growth prospects. 
B) Insider buying and selling of shares. 
C) Current P/E ratios versus historical ratios. 
D) The market itself.

Question 17

What is the advance-decline line? What does it tell the technician?

Accepted Answer

The net advance for a day is the number

Question 18

Conclusions about technical analysis suggest that:

Accepted Answer

A) it is Difficult to justify technical analysis. 
B) it has been found to be completely deficient. 
C) stock price movements repeat themselves constantly. 
D) there is complete agreement about the interpretation of technical signals. 
A) it is Difficult to justify technical analysis. 
B) it has been found to be completely deficient. 
C) stock price movements repeat themselves constantly. 
D) there is complete agreement about the interpretation of technical signals.

Question 19

Technical analysis is sometimes called market or ________ analysis.

Accepted Answer

A) external. 
B) internal. 
C) stochastic. 
D) qualitative. 
A) external. 
B) internal. 
C) stochastic. 
D) qualitative.

Question 20

Which of the following is not a contrary trading rule?

Accepted Answer

A) Relative strength ratio 
B) Investment advisory opinions 
C) Mutual fund liquidity positions 
D) Put/call ratio 
A) Relative strength ratio 
B) Investment advisory opinions 
C) Mutual fund liquidity positions 
D) Put/call ratio

Exam 16: Technical Analysis

What are support and resistance levels?

Which of the following is not true regarding the Dow Theory?

Discuss the difference in beliefs about price adjustments toward equilibrium in technical analysis and the Efficient Market Hypothesis.

One rule of thumb is that a stock is attractive when the relative strength has improved for at least ---------------months.

The two primary tools of a technical analyst are:

Institutional investors are often considered to have the "smart money," while small,individual investors are not so well informed about the market.Which two sentiment indicators treat both institutions and individuals alike?

Technicians that utilize the CBOE put/call ratio generally believe:

A put/call ratio of .70 indicates:

If a trading rule has been tried on data other than that used to produce the rule and found to be accurate,this is known as:

Which of the following is not one of the three major variables to be decided by the investor in order to construct a moving average?

The Dow theory is intended to forecast the start but not the duration of a primary movement.

The breadth of the market is typically measured by which of the following:

Which of the following is true regarding the resistance level?

Fama and Blume (1969)tested 24 filters ranging from 0.50% to 50% on each of the 30 DJIA stocks.Among the tested filters:

The oldest approach to common stock selection is:

What do technical analysts believe is the best source of data to use in analyzing stocks?:

What is the advance-decline line? What does it tell the technician?

Conclusions about technical analysis suggest that:

Technical analysis is sometimes called market or ________ analysis.

Which of the following is not a contrary trading rule?

Understanding Investments

Investment Alternatives

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

The Risks and Returns From Investing

Portfolio Theory

Portfolio Selection

Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis

Market Efficiency

Economy Market Analysis

Industry Analysis

Company Analysis

Bond Yields

Bonds: Analysis and Strategy

Options

Futures

Portfolio Management

Evaluation of Investment

Filters