Question 1

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

Accepted Answer

The net advance for a day is the number

Question 2

How does a point-and-figure chart compress many price changes into a small space?

Accepted Answer

By recording only "significant

Question 3

Which of the following would be considered a strong bearish signal?

Accepted Answer

A)  High mutual fund liquidity 
B)  Bullish advisory opinion 
C)  Low short interest ratio 
D)  Bearish advisory opinion 
A)  High mutual fund liquidity 
B)  Bullish advisory opinion 
C)  Low short interest ratio 
D)  Bearish advisory opinion

Question 4

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 5

Technical analysts agree with the fundamental analysts regarding the usefulness of accounting data.

Accepted Answer

A) True 
 B)False

Question 6

Small changes in the put/call ratio are considered unimportant, whereas extreme changes convey information. Two rules of thumb are that a ratio greater than _________ based on a 10-day moving average would be excessively bearish and thus a buy signal, and a ratio of less than _____________ would be excessively bullish, and therefore a sell signal.

Accepted Answer

A)  0.70, 0.65 
B)  0.80, 0.45 
C)  0.90, 0.25 
D)  0.95, 0.05 
A)  0.70, 0.65 
B)  0.80, 0.45 
C)  0.90, 0.25 
D)  0.95, 0.05

Question 7

A support level is a price range:

Accepted Answer

A)  at which a significant increase in demand for a stock is expected. 
B)  at which a significant increase in supply of a stock is expected. 
C)  below which a stock price cannot go. 
D)  above which a stock price cannot go. 
A)  at which a significant increase in demand for a stock is expected. 
B)  at which a significant increase in supply of a stock is expected. 
C)  below which a stock price cannot go. 
D)  above which a stock price cannot go.

Question 8

What four factors should be considered in testing technical trading rules?

Accepted Answer

Risk, transactions c

Question 9

All of the following are assumptions made by technical analysts except:

Accepted Answer

A)  Changes in trend are caused by shifts in supply and demand relationships. 
B)  Stock price movements are independent of one another. 
C)  Security prices tend to move in trends. 
D)  Supply and demand of securities are determined by various factors. 
A)  Changes in trend are caused by shifts in supply and demand relationships. 
B)  Stock price movements are independent of one another. 
C)  Security prices tend to move in trends. 
D)  Supply and demand of securities are determined by various factors.

Question 10

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 11

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 12

Which of the following indicates the market is at its peak, according to contrarians?

Accepted Answer

A)  the short-interest ratio is low 
B)  the bearish sentiment index is around 20 percent 
C)  mutual fund liquidity is low 
D)  all of the above would indicate a market peak to a contrarian 
A)  the short-interest ratio is low 
B)  the bearish sentiment index is around 20 percent 
C)  mutual fund liquidity is low 
D)  all of the above would indicate a market peak to a contrarian

Question 13

A put/call ratio greater than the typical upper limit would be interpreted as a bullish signal by the contrarians.

Accepted Answer

A) True 
 B)False

Question 14

Relative strength analysis is popular because it is generally not subject to conflicting interpretations.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 17

Some recent research shows technical analysis may have some value. For example, Brown and Jennings (1989) show investors can learn something about other investors by observing prices at which securities trade - i.e., prices reveal information and convey it. What other kinds of today's models open up the possibility of profitable trading strategies using technical analysis?

Accepted Answer

A)  Arbitrage. 
B)  Trading Rules. 
C)  Short-interest. 
D)  Behavioral. 
A)  Arbitrage. 
B)  Trading Rules. 
C)  Short-interest. 
D)  Behavioral.

Question 18

Which forms of the Efficient Market Hypothesis addresses the information used in technical and fundamental analysis? Do studies of technical analysis methods tend to support or refute the EMH?

Accepted Answer

The weak form EMH addresses market data

Question 19

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.

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

How does a point-and-figure chart compress many price changes into a small space?

Which of the following would be considered a strong bearish signal?

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

Technical analysts agree with the fundamental analysts regarding the usefulness of accounting data.

A support level is a price range:

What four factors should be considered in testing technical trading rules?

All of the following are assumptions made by technical analysts except:

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

The two primary tools of a technical analyst are:

Which of the following indicates the market is at its peak, according to contrarians?

A put/call ratio greater than the typical upper limit would be interpreted as a bullish signal by the contrarians.

Relative strength analysis is popular because it is generally not subject to conflicting interpretations.

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

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

Which forms of the Efficient Market Hypothesis addresses the information used in technical and fundamental analysis? Do studies of technical analysis methods tend to support or refute the EMH?

A put/call ratio of .70 indicates:

Investing Is an Important Activity Worldwide

Investment Alternatives: Generic Principles All Investors Must Know

Indirect Investing: a Global Activity

Securities Markets Matter to All Investors

All Financial Markets Have Regulations and Trading Practices

Return and Risk: the Foundation of Investing Worldwide

Portfolio Theory Is Universal

Portfolio Selection for All Investors

Asset Pricing Principles

Common Stock Valuation Lessons for All Investors

Managing a Stock Portfolio: a Worldwide Issue

What Happens If Markets Are Efficient or Not?

Economy/ market Analysis Must Be Considered by All Investor

Sector/ industry Analysis

Company Analysis

Fixed Income Securities Are Available Worldwide

Managing Bond Portfolios: Some Issues Affect All Investors

Understanding Derivative Securities: Options

Understanding Derivative Securities: Futures

All Investors Must Consider Portfolio Management

Evaluation of Investment Performance: a Global Concept

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Exam 16: Technical Analysis

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

How does a point-and-figure chart compress many price changes into a small space?

Which of the following would be considered a strong bearish signal?

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

Technical analysts agree with the fundamental analysts regarding the usefulness of accounting data.

A support level is a price range:

What four factors should be considered in testing technical trading rules?

All of the following are assumptions made by technical analysts except:

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

The two primary tools of a technical analyst are:

Which of the following indicates the market is at its peak, according to contrarians?

A put/call ratio greater than the typical upper limit would be interpreted as a bullish signal by the contrarians.

Relative strength analysis is popular because it is generally not subject to conflicting interpretations.

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

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

Which forms of the Efficient Market Hypothesis addresses the information used in technical and fundamental analysis? Do studies of technical analysis methods tend to support or refute the EMH?

A put/call ratio of .70 indicates:

Investing Is an Important Activity Worldwide

Investment Alternatives: Generic Principles All Investors Must Know

Indirect Investing: a Global Activity

Securities Markets Matter to All Investors

All Financial Markets Have Regulations and Trading Practices

Return and Risk: the Foundation of Investing Worldwide

Portfolio Theory Is Universal

Portfolio Selection for All Investors

Asset Pricing Principles

Common Stock Valuation Lessons for All Investors

Managing a Stock Portfolio: a Worldwide Issue

What Happens If Markets Are Efficient or Not?

Economy/ market Analysis Must Be Considered by All Investor

Sector/ industry Analysis

Company Analysis

Fixed Income Securities Are Available Worldwide

Managing Bond Portfolios: Some Issues Affect All Investors

Understanding Derivative Securities: Options

Understanding Derivative Securities: Futures

All Investors Must Consider Portfolio Management

Evaluation of Investment Performance: a Global Concept

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