Question 1

The Elliott wave theory gives a buy signal when you can identify a primary bull trend by identifying ________.

Accepted Answer

A)  when the long-term direction of the market is positive 
B)  when the long-term direction of the market is negative 
C)  when the long-term direction of the market is stable 
D)  good stocks without regard to the long-term direction of the market 
A)  when the long-term direction of the market is positive 
B)  when the long-term direction of the market is negative 
C)  when the long-term direction of the market is stable 
D)  good stocks without regard to the long-term direction of the market

Question 2

Trend analysts who follow bonds are most likely to monitor the ________.

Accepted Answer

A)  confidence index 
B)  odd-lot trading 
C)  short interest 
D)  TRIN statistic 
A)  confidence index 
B)  odd-lot trading 
C)  short interest 
D)  TRIN statistic

Question 3

Contrarian investors consider a high put/call ratio a ________.

Accepted Answer

A)  bearish signal 
B)  bullish signal 
C)  trend confirmation signal 
D)  signal to enter the options market 
A)  bearish signal 
B)  bullish signal 
C)  trend confirmation signal 
D)  signal to enter the options market

Question 4

From day 1 to day 4, the TRIN has ________ and is ________.

Accepted Answer

A)  increased; bullish 
B)  increased; bearish 
C)  decreased; bullish 
D)  decreased; bearish 
A)  increased; bullish 
B)  increased; bearish 
C)  decreased; bullish 
D)  decreased; bearish

Question 5

You find that the confidence index is down, the market breadth is up, and the trin ratio is down. In total, how many bullish signs do you have?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  3 
A)  0 
B)  1 
C)  2 
D)  3

Question 6

The TRIN on day 2 is ________.

Accepted Answer

A)  .72 
B)  1.04 
C) .92 
D)  .55 
A)  .72 
B)  1.04 
C) .92 
D)  .55

Question 7

A major problem with technical trading strategies is that ________.

Accepted Answer

A)  it is very difficult to identify a true trend before the fact 
B)  it is very difficult to identify the correct trend after the fact 
C)  it is so easy to identify trends that all investors quickly do so 
D)  Kondratieff showed that you can't identify trends without 48 to 60 years of data 
A)  it is very difficult to identify a true trend before the fact 
B)  it is very difficult to identify the correct trend after the fact 
C)  it is so easy to identify trends that all investors quickly do so 
D)  Kondratieff showed that you can't identify trends without 48 to 60 years of data

Question 8

Technical traders view mutual fund investors as ________ market timers.

Accepted Answer

A)  excellent 
B)  frequent 
C)  neutral 
D)  poor 
A)  excellent 
B)  frequent 
C)  neutral 
D)  poor

Question 9

The moving average generates buy signal(s) ________.

Accepted Answer

A)  on days 3, 11, and 15 
B)  on days 2, 8, and 16 
C)  on days 5, 9, and 13 
D)  on no days 
A)  on days 3, 11, and 15 
B)  on days 2, 8, and 16 
C)  on days 5, 9, and 13 
D)  on no days

Question 10

On a particular day, there were 890 stocks that advanced on the NYSE and 723 that declined. The volume in advancing issues was 80,846,000, and the volume in declining issues was 70,397,000. The common measure of market breadth is ________.

Accepted Answer

A)  -10,449,000 
B)  -167 
C)  167 
D)  10,449,000 
A)  -10,449,000 
B)  -167 
C)  167 
D)  10,449,000

Question 11

According to market technicians, it is time to sell stock in a head-and-shoulders formation when ________.

Accepted Answer

A)  the price index pierces the left shoulder 
B)  the price index pierces the right shoulder 
C)  the price index pierces the head 
D)  none of these options takes place 
A)  the price index pierces the left shoulder 
B)  the price index pierces the right shoulder 
C)  the price index pierces the head 
D)  none of these options takes place

Question 12

Relative strength is ________ indicator.

Accepted Answer

A)  a fundamental 
B)  an economic 
C)  a technical 
D)  an international 
A)  a fundamental 
B)  an economic 
C)  a technical 
D)  an international

Question 13

Even though indexing is growing in popularity, only about ________ of equity in the mutual fund industry is held in indexed funds. This may be a sign that investors and managers ________.

Accepted Answer

A)  5%; are excessively conservative 
B)  25%; overestimate their ability 
C)  15%; suffer from framing biases 
D)  25%; engage in mental accounting 
A)  5%; are excessively conservative 
B)  25%; overestimate their ability 
C)  15%; suffer from framing biases 
D)  25%; engage in mental accounting

Question 14

The cumulative breadth for the first 2 days is ________.

Accepted Answer

A)  -240 
B)  -50 
C)  110 
D)  250 
A)  -240 
B)  -50 
C)  110 
D)  250

Question 15

If investors overweight recent performance in forecasting the future, they are exhibiting ________.

Accepted Answer

A)  representativeness bias 
B)  framing error 
C)  memory bias 
D)  overconfidence 
A)  representativeness bias 
B)  framing error 
C)  memory bias 
D)  overconfidence

Question 16

The cumulative tally of the number of advancing stocks minus declining stocks is called the ________.

Accepted Answer

A)  market breadth 
B)  market volume 
C)  trin ratio 
D)  relative strength ratio 
A)  market breadth 
B)  market volume 
C)  trin ratio 
D)  relative strength ratio

Question 17

Following a period of falling prices, the moving average will ________.

Accepted Answer

A)  be below the current price 
B)  be above the current price 
C)  be equal to the current price 
D)  become more volatile than it had been before prices fell 
A)  be below the current price 
B)  be above the current price 
C)  be equal to the current price 
D)  become more volatile than it had been before prices fell

Question 18

An investor purchases shares of an index fund. The investor could take on the same level of risk by taking out a loan and purchasing a higher-risk specialty fund. The Sharpe ratio on this complete portfolio is higher than her existing investment. What behavioral concept prevents the investor from taking out the loan and investing in the index fund?

Accepted Answer

A)  Framing bias 
B)  Excessive volatility 
C)  Loss aversion 
D)  Mental accounting 
A)  Framing bias 
B)  Excessive volatility 
C)  Loss aversion 
D)  Mental accounting

Question 19

Cumulative breadth for the 4 days is ________, which is ________.

Accepted Answer

A)  -140; bullish 
B)  -140; bearish 
C)  -300; bullish 
D)  -300; bearish 
A)  -140; bullish 
B)  -140; bearish 
C)  -300; bullish 
D)  -300; bearish

Question 20

If investors are too slow to update their beliefs about a stock's future performance when new evidence arises, they are exhibiting ________.

Accepted Answer

A)  representativeness bias 
B)  framing error 
C)  conservatism 
D)  memory bias 
A)  representativeness bias 
B)  framing error 
C)  conservatism 
D)  memory bias

Exam 9: Behavioral Finance and Technical Analysis

The Elliott wave theory gives a buy signal when you can identify a primary bull trend by identifying ________.

Trend analysts who follow bonds are most likely to monitor the ________.

Contrarian investors consider a high put/call ratio a ________.

From day 1 to day 4, the TRIN has ________ and is ________.

You find that the confidence index is down, the market breadth is up, and the trin ratio is down. In total, how many bullish signs do you have?

The TRIN on day 2 is ________.

A major problem with technical trading strategies is that ________.

Technical traders view mutual fund investors as ________ market timers.

The moving average generates buy signal(s) ________.

On a particular day, there were 890 stocks that advanced on the NYSE and 723 that declined. The volume in advancing issues was 80,846,000, and the volume in declining issues was 70,397,000. The common measure of market breadth is ________.

According to market technicians, it is time to sell stock in a head-and-shoulders formation when ________.

Relative strength is ________ indicator.

Even though indexing is growing in popularity, only about ________ of equity in the mutual fund industry is held in indexed funds. This may be a sign that investors and managers ________.

The cumulative breadth for the first 2 days is ________.

If investors overweight recent performance in forecasting the future, they are exhibiting ________.

The cumulative tally of the number of advancing stocks minus declining stocks is called the ________.

Following a period of falling prices, the moving average will ________.

Cumulative breadth for the 4 days is ________, which is ________.

If investors are too slow to update their beliefs about a stock's future performance when new evidence arises, they are exhibiting ________.

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Bond Prices and Yields

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Financial Statement Analysis

Options Markets

Option Valuation

Futures Markets and Risk Management

Evaluating Investment Performance

International Diversification

Hedge Funds

Taxes, Inflation, and Investment Strategy

Investors and the Investment Process

Filters

From day 1 to day 4, the TRIN has and is .

Even though indexing is growing in popularity, only about of equity in the mutual fund industry is held in indexed funds. This may be a sign that investors and managers .

Cumulative breadth for the 4 days is , which is .