Question 1

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 opinionE) A) and B)
F) A) and C)

Question 2

Which of the following is not an assumption made by technical analysts?

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.E) B) and D)
F) C) and D)

Question 3

In the 1990s,many investment firms hired numerous fundamental analysts and very few technical analysts.Following the market downturns of 2000,2001,and 2008,investment firms realized their mistake and hired far more technical analysts than fundamental analysts.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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.E) All of the above
F) A) and B)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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.E) A) and B)
F) All of the above

Question 8

Which of the following is not one of the three major variables to be decided by the investor in order to construct a moving average?

Accepted Answer

A)  Price to be used
B)  Time period to be used
C)  Weight to be used
D)  Type of moving average to be constructedE) C) and D)
F) A) and D)

Question 9

Technical analysis differs from fundamental analysis in that technical analysis:

Accepted Answer

A)  is aimed at the market,while fundamental analysis is aimed at individual stocks.
B)  is based on published market data and focuses on internal factors.
C)  focuses on the long-term trends of production.
D)  does not consider price and volume.E) C) and D)
F) B) and C)

Question 10

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.E) A) and B)
F) B) and C)

Question 11

How is relative strength calculated and used?

Accepted Answer

The relative strength of a stock is a ra...

Question 12

The Dow Theory is intended to forecast the start but not the duration of a primary movement.

Accepted Answer

A) True 
 B)False

Question 13

Explain how profit taking and support levels are related.

Accepted Answer

The scenario is as follows:The stock pri...

Question 14

If a trading rule has been tested on data other than that used to produce the rule and found to be accurate,this is known as:

Accepted Answer

A)  consistency.
B)  relative strength.
C)  out-of-sample validity.
D)  a filter rule.E) None of the above
F) C) and D)

Question 15

Which of the following is a characteristic of the short interest ratio?

Accepted Answer

A)  It is calculated daily as well as weekly.
B)  It is often interpreted without any additional information.
C)  It has had a value between 2 and 3 in recent times.
D)  It is considered to be a measure of investor sentiment.E) All of the above
F) None of the above

Question 16

Which of the following statements about the put/call ratio is most accurate?

Accepted Answer

A)  A negative ratio is bullish.
B)  Investors interpret a ratio greater than 1 to be a bearish indicator.
C)  Investors interpret a relatively low ratio to be a bearish indicator.
D)  Investors interpret a relatively high ratio to be a bearish indicator.E) A) and D)
F) None of the above

Question 17

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.E) All of the above
F) A) and C)

Question 18

The oldest approach to common stock selection is:

Accepted Answer

A)  technical analysis.
B)  fundamental analysis.
C)  stochastic analysis.
D)  value analysis.E) All of the above
F) B) and C)

Question 19

If an investor buys a stock when its price has increased 2 percent from its previous price,the investor is employing:

Accepted Answer

A)  a contrarian indicator.
B)  a filter rule.
C)  a sentiment indicator.
D)  relative strength analysis.E) None of the above
F) A) and C)

Question 20

Which of the following is not a contrary trading rule?

Accepted Answer

A)  Relative strength ratio
B)  Investment advisory opinions
C)  Mutual fund liquidity positions
D)  Put/call ratioE) C) and D)
F) All of the above

Exam 16: Technical Analysis

The Dow Theory is intended to forecast the start but not the duration of a primary movement.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not one of the three major variables to be decided by the investor in order to construct a moving average?

Correct AnswerverifiedShow Answer

Technical analysis reflects the idea that stock prices:

Correct AnswerverifiedShow Answer

In the 1990s,many investment firms hired numerous fundamental analysts and very few technical analysts.Following the market downturns of 2000,2001,and 2008,investment firms realized their mistake and hired far more technical analysts than fundamental analysts.

Correct AnswerverifiedShow Answer

Technical analysis differs from fundamental analysis in that technical analysis:

Correct AnswerverifiedShow Answer

If a trading rule has been tested on data other than that used to produce the rule and found to be accurate,this is known as:

Correct AnswerverifiedShow Answer

If an investor buys a stock when its price has increased 2 percent from its previous price,the investor is employing:

Correct AnswerverifiedShow Answer

Which of the following is not a contrary trading rule?

Correct AnswerverifiedShow Answer

A high short interest ratio is generally interpreted as:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements about the put/call ratio is most accurate?

Correct AnswerverifiedShow Answer

Explain how profit taking and support levels are related.

Correct AnswerverifiedThe scenario is as follows:The stock pri...View AnswerShow Answer

The oldest approach to common stock selection is:

Correct AnswerverifiedShow Answer

Which of the following is not an assumption made by technical analysts?

Correct AnswerverifiedShow Answer

How is relative strength calculated and used?

Correct AnswerverifiedThe relative strength of a stock is a ra...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is true regarding the resistance level?

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of the short interest ratio?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The scenario is as follows:The stock pri...
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The relative strength of a stock is a ra...
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