Question 1

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 2

What is the price range at which technicians feel that a significant increase in the price of the stock will be resisted referred to as?

Accepted Answer

A)  Supply threshold. 
B)  Support level. 
C)  Short interest level. 
D)  Advancement level. 
E)  Resistance level. 
A)  Supply threshold. 
B)  Support level. 
C)  Short interest level. 
D)  Advancement level. 
E)  Resistance level.

Question 3

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)  Montreal Exchange 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)  Montreal Exchange put/call ratio 
E)  Confidence index

Question 4

According to Dow theory, a major market

Accepted Answer

A)  Advance has few price fluctuations indicate a new upward trend. 
B)  Advance does not go straight up, because some investors will take profits. 
C)  Decline is easier to predict than an advance. 
D)  Decline typically has a higher level of volume than a major market advance. 
E)  Choices a and d. 
A)  Advance has few price fluctuations indicate a new upward trend. 
B)  Advance does not go straight up, because some investors will take profits. 
C)  Decline is easier to predict than an advance. 
D)  Decline typically has a higher level of volume than a major market advance. 
E)  Choices a and d.

Question 5

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 6

Which of the following is not considered an assumption of technical analysis?

Accepted Answer

A)  Market value is determined solely by supply and demand. 
B)  Supply and demand are governed by both rational and irrational factors. 
C)  Security prices tend to move in trends that persist for an appreciable length of time. 
D)  Stock prices follow a random walk. 
E)  Changes in trend are caused by the shifts in supply and demand relationships. 
A)  Market value is determined solely by supply and demand. 
B)  Supply and demand are governed by both rational and irrational factors. 
C)  Security prices tend to move in trends that persist for an appreciable length of time. 
D)  Stock prices follow a random walk. 
E)  Changes in trend are caused by the shifts in supply and demand relationships.

Question 7

Two major classes of technicians include the contrarians and those who "follow the smart money".

Accepted Answer

A) True 
 B)False

Question 8

How might a technical analyst use credit balances in brokerage accounts?

Accepted Answer

A)  Sell stock when credit balances rise 
B)  Buy stock when credit balances rise 
C)  Sell stock when credit balances decline 
D)  Choices b and c 
E)  None of the above. 
A)  Sell stock when credit balances rise 
B)  Buy stock when credit balances rise 
C)  Sell stock when credit balances decline 
D)  Choices b and c 
E)  None of the above.

Question 9

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 10

The market is considered to be overbought and subject to a negative correction when more than

Accepted Answer

A)  60% of the stocks are selling above their 90 day average. 
B)  70% of the stocks are selling above their 100 day average. 
C)  80% of the stocks are selling above their 200 day average. 
D)  700% of the stocks are selling above their 150 day average. 
E)  90% of the stocks are selling above their 150 day average. 
A)  60% of the stocks are selling above their 90 day average. 
B)  70% of the stocks are selling above their 100 day average. 
C)  80% of the stocks are selling above their 200 day average. 
D)  700% of the stocks are selling above their 150 day average. 
E)  90% of the stocks are selling above their 150 day average.

Question 11

If technical trading rule is successful, more traders use it, causing the rule to become even more successful.

Accepted Answer

A) True 
 B)False

Question 12

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 13

When ____ of stocks are trading above the 200-day moving average, the market is considered ____, and subject to a ____.

Accepted Answer

A)  20%, oversold, negative correction 
B)  80%, overbought, negative correction 
C)  80%, oversold, positive correction 
D)  20%, overbought, positive correction 
E)  10%, overbought, positive correction 
A)  20%, oversold, negative correction 
B)  80%, overbought, negative correction 
C)  80%, oversold, positive correction 
D)  20%, overbought, positive correction 
E)  10%, overbought, positive correction

Question 14

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.

Question 15

An increase in debit balances in brokerage accounts is viewed by technicians as a bullish sign.

Accepted Answer

A) True 
 B)False

Question 16

What would analysts following what the smart, sophisticated investor is doing 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

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 18

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 19

The Dow Theory describes stock prices as moving in trends analogous to the movement of water. Which of the following statements is not true?

Accepted Answer

A)  Major trends resemble tides. 
B)  Intermediate trends resemble waves. 
C)  Short-run movements are like ripples. 
D)  Waves are the most important. 
E)  None of the above (that is, all are true statements) 
A)  Major trends resemble tides. 
B)  Intermediate trends resemble waves. 
C)  Short-run movements are like ripples. 
D)  Waves are the most important. 
E)  None of the above (that is, all are true statements)

Question 20

Daily closings for the S&P/TSX Composite Index are provided in the table below. 
$\begin{array}{cc}
\text { Day } & \text { S\&P/TSX } \
\hline 1 & 13,500 \
2 & 13,395 \
3 & 13,505 \
4 & 13,750 \
5 & 13,820 \
6 & 13,910
\end{array}$
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

Exam 10: Technical Analysis

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

What is the price range at which technicians feel that a significant increase in the price of the stock will be resisted referred to as?

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

According to Dow theory, a major market

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.

Which of the following is not considered an assumption of technical analysis?

Two major classes of technicians include the contrarians and those who "follow the smart money".

How might a technical analyst use credit balances in brokerage accounts?

Advances and declines are associated with market

The market is considered to be overbought and subject to a negative correction when more than

If technical trading rule is successful, more traders use it, causing the rule to become even more successful.

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

When ____ of stocks are trading above the 200-day moving average, the market is considered ____, and subject to a ____.

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 increase in debit balances in brokerage accounts is viewed by technicians as a bullish sign.

What would analysts following what the smart, sophisticated investor is doing examine?

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

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

The Dow Theory describes stock prices as moving in trends analogous to the movement of water. Which of the following statements is not true?

Daily closings for the S&P/TSX Composite Index are provided in the table below. Day S\&P/TSX 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.

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

When of stocks are trading above the 200-day moving average, the market is considered , and subject to a .