Question 1

Technicians that utilize the CBOE put/call ratio generally believe:

Accepted Answer

A)  option investors tend to be losers. 
B)  option investors tend to be winners. 
C)  option investors are true technicians. 
D)  option investors possess inside information. 
A)  option investors tend to be losers. 
B)  option investors tend to be winners. 
C)  option investors are true technicians. 
D)  option investors possess inside information.

Question 2

The oldest approach to common stock selection is:

Accepted Answer

A)  technical analysis. 
B)  fundamental analysis. 
C)  stochastic analysis. 
D)  value analysis. 
A)  technical analysis. 
B)  fundamental analysis. 
C)  stochastic analysis. 
D)  value analysis.

Question 3

Discuss the difference in beliefs about price adjustments toward equilibrium in technical analysis and the Efficient Market Hypothesis.

Accepted Answer

Technical analysis depends on

Question 4

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

Accepted Answer

The net advance for a day is the number

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

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 10

In order to have confirmation of a major market trend under the Dow Theory, the:

Accepted Answer

A)  industrial and utility averages must confirm each other. 
B)  transportation and utility averages must confirm each other. 
C)  utility average must lead the transportation average. 
D)  transportation and industrial average must confirm each other. 
A)  industrial and utility averages must confirm each other. 
B)  transportation and utility averages must confirm each other. 
C)  utility average must lead the transportation average. 
D)  transportation and industrial average must confirm each other.

Question 11

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

Question 12

A head and shoulders pattern is generally interpreted as a bearish indicator by technical analysts.

Accepted Answer

A) True 
 B)False

Question 13

Assume an individual writes down Hs and Ts to simulate 100 coin flips. On average, how will this series appear relative to the result of 100 actual coin flips? Relative to the actual coin flips, the simulated series will:

Accepted Answer

A)  contain too many runs with too much length per run. 
B)  contain too many runs with not enough length per run. 
C)  contain too few runs with too much length per run. 
D)  contain too few runs with not enough length per run. 
A)  contain too many runs with too much length per run. 
B)  contain too many runs with not enough length per run. 
C)  contain too few runs with too much length per run. 
D)  contain too few runs with not enough length per run.

Question 14

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

Accepted Answer

Risk, transactions c

Question 15

How is relative strength calculated and used?

Accepted Answer

The relative strength of a stock is a ra

Question 16

What are support and resistance levels?

Accepted Answer

If a stock price is falling, a support l

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

Question 18

Historical tests of filter rules indicate that:

Accepted Answer

A)  several filters were profitable before commissions, but not after. 
B)  several filters were profitable before and after commissions. 
C)  no filters were profitable even before commissions. 
D)  all filters were profitable before commissions, but not after. 
A)  several filters were profitable before commissions, but not after. 
B)  several filters were profitable before and after commissions. 
C)  no filters were profitable even before commissions. 
D)  all filters were profitable before commissions, but not after.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

Analysts can use industry rela

Exam 16: Technical Analysis

Technicians that utilize the CBOE put/call ratio generally believe:

The oldest approach to common stock selection is:

Discuss the difference in beliefs about price adjustments toward equilibrium in technical analysis and the Efficient Market Hypothesis.

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

A support level is a price range:

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

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

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.

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

In order to have confirmation of a major market trend under the Dow Theory, the:

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?

A head and shoulders pattern is generally interpreted as a bearish indicator by technical analysts.

Assume an individual writes down Hs and Ts to simulate 100 coin flips. On average, how will this series appear relative to the result of 100 actual coin flips? Relative to the actual coin flips, the simulated series will:

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

How is relative strength calculated and used?

What are support and resistance levels?

Technical analysis reflects the idea that stock prices:

Historical tests of filter rules indicate that:

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

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

Understanding Investments

Investment Alternatives

Indirect Investing

Securities Markets and Market Indexes

How Securities Are Traded

The Risk and Return From Investing

Portfolio Theory

Portfolio Selection and Asset Allocation

Capital Market Theory and Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economymarket Analysis

Sectorindustry Analysis

Company Analysis

Bond Yields and Prices

Bonds: Analysis and Strategy

Options

Futures Contracts

Managing Your Financial Assets

Evaluation of Investment Performance

Filters