Question 1

In the 1990s, many investment firms hired large numbers of fundamental analysts and very few technical analysts. Following the market downturns of 2000 and 2001, investment firms realized their mistake and hired far more technical analysts than fundamental analysts.

Accepted Answer

A) True 
 B)False

Question 2

Explain how profit taking and support levels are related.

Accepted Answer

The answer of Explain how profit taking and support levels...

Question 3

A filter rule specifies a breakpoint for a stock or average and trades are made when the price is greater than the filter.

Accepted Answer

A) True 
 B)False

Question 4

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.

Question 5

Conclusions about technical analysis suggest that:

Accepted Answer

A)  it is 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 6

What is usually shown at the bottom of a bar chart?

Accepted Answer

A)  a point and figure chart 
B)  advance/decline line 
C)  closing price 
D)  volume

Question 7

Investors who sell short expect to make money when the stock price goes down. How, then, can a high short-interest ratio be considered bullish?

Accepted Answer

The answer of Investors who sell short expect to make...

Question 8

How can relative strength analysis be helpful in a top-down approach to security analysis?

Accepted Answer

The answer of How can relative strength analysis be helpful...

Question 9

Technical analysis reflects the idea that stock prices:

Accepted Answer

A)  move upward over time. 
B)  move inversely over time. 
C)  move in trends. 
D)  move randomly.

Question 10

If a trend exhibits support and resistance levels simultaneously that appear well defined, the trendlines are referred to as channel lines.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a characteristic of the short interest ratio: It is:

Accepted Answer

A)  calculated daily as well as weekly. 
B)  often interpreted without any additional information. 
C)  between 2 and 3 in recent times. 
D)  considered to be a measure of investor sentiment.

Question 12

A bar chart is the simplest type of chart used in technical analysis.

Accepted Answer

A) True 
 B)False

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.

Question 14

What are support and resistance levels?

Accepted Answer

The answer of What are support and resistance levels?...

Question 15

Technical analysis is sometimes called market or ________ analysis.

Accepted Answer

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

Question 16

The cash position of mutual funds is a contrarian indicator.

Accepted Answer

A) True 
 B)False

Question 17

If an investor buys a stock when its price has increased 15 percent from its previous low, the investor is employing:

Accepted Answer

A)  a contrarian indicator. 
B)  a filter rule. 
C)  a sentiment indicator. 
D)  relative strength analysis.

Question 18

A high short interest ratio is generally interpreted as:

Accepted Answer

A)  a bullish signal. 
B)  evidence of a downside breakout. 
C)  a bearish signal. 
D)  evidence of the presence of odd-lot individual investors.

Question 19

Secondary movements are often termed technical corrections.

Accepted Answer

A) True 
 B)False

Question 20

The bearish-sentiment index is calculated as the ratio of advisory services that are bearish to the total number with an opinion.

Accepted Answer

A) True 
 B)False

Exam 16: Technical Analysis

In the 1990s, many investment firms hired large numbers of fundamental analysts and very few technical analysts. Following the market downturns of 2000 and 2001, investment firms realized their mistake and hired far more technical analysts than fundamental analysts.

Explain how profit taking and support levels are related.

A filter rule specifies a breakpoint for a stock or average and trades are made when the price is greater than the filter.

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

Conclusions about technical analysis suggest that:

What is usually shown at the bottom of a bar chart?

Investors who sell short expect to make money when the stock price goes down. How, then, can a high short-interest ratio be considered bullish?

How can relative strength analysis be helpful in a top-down approach to security analysis?

Technical analysis reflects the idea that stock prices:

If a trend exhibits support and resistance levels simultaneously that appear well defined, the trendlines are referred to as channel lines.

Which of the following is a characteristic of the short interest ratio: It is:

A bar chart is the simplest type of chart used in technical analysis.

Which of the following is true regarding the resistance level?

What are support and resistance levels?

Technical analysis is sometimes called market or ________ analysis.

The cash position of mutual funds is a contrarian indicator.

If an investor buys a stock when its price has increased 15 percent from its previous low, the investor is employing:

A high short interest ratio is generally interpreted as:

Secondary movements are often termed technical corrections.

The bearish-sentiment index is calculated as the ratio of advisory services that are bearish to the total number with an opinion.