Question 1

What might a technical analyst consider 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 2

The ratio of OTC volume versus TSX volume 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 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 can not 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 can not 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

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 8

All of the following are classified as contrary trading rules, except:

Accepted Answer

A)  Odd lot short sales. 
B)  Investment advisory opinions. 
C)  Relative OTC volume. 
D)  Montreal Exchange put/call ratio. 
E)  Confidence index. 
A)  Odd lot short sales. 
B)  Investment advisory opinions. 
C)  Relative OTC volume. 
D)  Montreal Exchange put/call ratio. 
E)  Confidence index.

Question 9

Technicians consider a high short interest ratio to be bearish.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Exhibit 10-2
THE FOLLOWING INFORMATION IS TO BE USED TO ANSWER THE NEXT QUESTION(S)
The table below provides five days of trade data. $$\begin{array} { c c c c c } 
& \text { Issues } & & & \
\hline \text { Day } & \text { Traded } & \text { Advances } & \text { Declines } & \text { Unchanged } \
 1 & 22456 & 15698 & 6158 & 600 \
2 & 23013 & 14560 & 8210 & 243 \
3 & 23124 & 10324 & 12676 & 122 \
4 & 22678 & 9867 & 11567 & 1244 \
5 & 21897 & 8678 & 12561 & 658
\end{array}$$
-Refer to Exhibit 10-2. 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 12

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

Accepted Answer

A) True 
 B)False

Question 13

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? $$\begin{array}{l}

\begin{array} { c c c c c } 
&\text { Issues }\
\text { Day } & \text { Traded } & \text { Acvances } & \text { Declines } & \text { Unchanged } \
\hline 1 & 8540 & 6500 & 1500 & 540 \
2 & 7535 & 5500 & 1230 & 805 \
3 & 6545 & 4554 & 1324 & 667
\end{array}
\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 14

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

Accepted Answer

A) True 
 B)False

Question 15

The T-Bill-Eurodollar yield spread widens during periods of international crisis.

Accepted Answer

A) True 
 B)False

Question 16

____ charts show time series of price while ____ charts only reflect change regardless of time.

Accepted Answer

A)  Relative strength, bar 
B)  Relative strength, advance/decline 
C)  Point and bar, figure 
D)  Bar, point and figure 
E)  Bar, multiple indicator 
A)  Relative strength, bar 
B)  Relative strength, advance/decline 
C)  Point and bar, figure 
D)  Bar, point and figure 
E)  Bar, multiple indicator

Question 17

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 18

Contrary trading rules assert that investors tend to be wrong except at market peaks and troughs.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

What is a type of charting which normally disregards both time and volume?

Accepted Answer

A)  Bar chart. 
B)  Point and figure chart. 
C)  Pie chart. 
D)  Histogram. 
E)  Linear regression graph. 
A)  Bar chart. 
B)  Point and figure chart. 
C)  Pie chart. 
D)  Histogram. 
E)  Linear regression graph.

Exam 10: Technical Analysis

What might a technical analyst consider a bearish signal?

The ratio of OTC volume versus TSX volume a measure of ______. This ratio typically ______ at a market ______.

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

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

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

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

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

All of the following are classified as contrary trading rules, except:

Technicians consider a high short interest ratio to be bearish.

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

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

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? Issues Day Traded Acvances Declines Unchanged 1 8540 6500 1500 540 2 7535 5500 1230 805 3 6545 4554 1324 667

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

The T-Bill-Eurodollar yield spread widens during periods of international crisis.

____ charts show time series of price while ____ charts only reflect change regardless of time.

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

Contrary trading rules assert that investors tend to be wrong except at market peaks and troughs.

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

What is a type of charting which normally disregards both time and volume?

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Bond Fundamentals

The Analysis and Valuation of Bonds

An Introduction to Derivative Markets and Securities

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Analysis of Financial Statements

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

Appendix: Objectives and Constraints of Institutional Investors

Filters

The ratio of OTC volume versus TSX volume a measure of . This ratio typically at a market __.

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

charts show time series of price while charts only reflect change regardless of time.