Question 1

As the ratio of specialist short sales to total short sales increases, technicians consider the market to be:

Accepted Answer

A) bullish. 
B) bearish. 
C) neutral. 
D) in the second leg of a bull market. 
A) bullish. 
B) bearish. 
C) neutral. 
D) in the second leg of a bull market.

Question 2

Mutual fund cash positions and trading by insiders are not generally reliable indicators of market health or activity.

Accepted Answer

A) True 
 B)False

Question 3

The essence of the contrary opinion rule is that it is easier to figure out who is right than who is wrong.

Accepted Answer

A) True 
 B)False

Question 4

A breadth of the market indicator attempts to measure what a broad range of securities is doing as opposed to merely examining a market average.

Accepted Answer

A) True 
 B)False

Question 5

The problem in reading charts has always been:

Accepted Answer

A) with the errors that are frequently made in the graphing process. 
B) understanding the past market movements. 
C) in analyzing the patterns in such a fashion that they truly predict stock market movements before they unfold. 
D) None of the above 
A) with the errors that are frequently made in the graphing process. 
B) understanding the past market movements. 
C) in analyzing the patterns in such a fashion that they truly predict stock market movements before they unfold. 
D) None of the above

Question 6

Point and figure charts emphasize significant price changes and price reversals.

Accepted Answer

A) True 
 B)False

Question 7

While the Dow Jones Industrial Average may be weighted toward large firms, a __________ indicator may be used to examine all stocks on an exchange.

Accepted Answer

A) Key 
B) Contrary opinion 
C) Breadth of the market 
D) More than one of the above 
A) Key 
B) Contrary opinion 
C) Breadth of the market 
D) More than one of the above

Question 8

Barron's Confidence Index has only a mixed record of success.

Accepted Answer

A) True 
 B)False

Question 9

The Barron's Confidence Index is based on the premise that bond traders, being more sophisticated than stock traders, pick up trends more quickly.

Accepted Answer

A) True 
 B)False

Question 10

Smart Money Rules include:

Accepted Answer

A) Barron's Confidence Index. 
B) short sales by individuals. 
C) short sales by specialists. 
D) Both A and C 
A) Barron's Confidence Index. 
B) short sales by individuals. 
C) short sales by specialists. 
D) Both A and C

Question 11

Investment advisory recommendations are part of the smart money rules.

Accepted Answer

A) True 
 B)False

Question 12

The ____________ suggests watching the small investor, who is right most of the time but misses key market turns, and then doing the opposite.

Accepted Answer

A) contrary opinion rule 
B) odd-lot theory 
C) greed index 
D) None of the above 
A) contrary opinion rule 
B) odd-lot theory 
C) greed index 
D) None of the above

Question 13

Divergence between advances and declines in a breadth of the market indicator and the Dow Jones Industrial Average may signal a reversing trend in the market.

Accepted Answer

A) True 
 B)False

Question 14

A support level signals new demand.

Accepted Answer

A) True 
 B)False

Question 15

Chartists carefully read point and figure charts to observe market patterns (where there is support, resistance, breakouts, congestion, and so on).

Accepted Answer

A) True 
 B)False

Question 16

Odd-lot traders have never outguessed professional traders.

Accepted Answer

A) True 
 B)False

Question 17

Smart money rules or approaches to the market include:

Accepted Answer

A) short sales by specialists. 
B) the put-call ratio. 
C) Investment Advisory recommendations. 
D) the odd-lot theory. 
A) short sales by specialists. 
B) the put-call ratio. 
C) Investment Advisory recommendations. 
D) the odd-lot theory.

Question 18

When short sellers are bearish, it is thought to be a bullish signal.

Accepted Answer

A) True 
 B)False

Question 19

Under normal circumstances, the Barron's Confidence Index is between 100 and 200.

Accepted Answer

A) True 
 B)False

Question 20

Volume of short sales represents a contrary opinion rule, because:

Accepted Answer

A) short sellers generally do not know what they are doing. 
B) short sellers tend to overreact. 
C) short sales generate potential demand for stocks. 
D) More than one of the above 
A) short sellers generally do not know what they are doing. 
B) short sellers tend to overreact. 
C) short sales generate potential demand for stocks. 
D) More than one of the above

Exam 10: Behavioral Finance and Technical Analysis

As the ratio of specialist short sales to total short sales increases, technicians consider the market to be:

Mutual fund cash positions and trading by insiders are not generally reliable indicators of market health or activity.

The essence of the contrary opinion rule is that it is easier to figure out who is right than who is wrong.

A breadth of the market indicator attempts to measure what a broad range of securities is doing as opposed to merely examining a market average.

The problem in reading charts has always been:

Point and figure charts emphasize significant price changes and price reversals.

While the Dow Jones Industrial Average may be weighted toward large firms, a __________ indicator may be used to examine all stocks on an exchange.

Barron's Confidence Index has only a mixed record of success.

The Barron's Confidence Index is based on the premise that bond traders, being more sophisticated than stock traders, pick up trends more quickly.

Smart Money Rules include:

Investment advisory recommendations are part of the smart money rules.

The ____________ suggests watching the small investor, who is right most of the time but misses key market turns, and then doing the opposite.

Divergence between advances and declines in a breadth of the market indicator and the Dow Jones Industrial Average may signal a reversing trend in the market.

A support level signals new demand.

Chartists carefully read point and figure charts to observe market patterns (where there is support, resistance, breakouts, congestion, and so on).

Odd-lot traders have never outguessed professional traders.

Smart money rules or approaches to the market include:

When short sellers are bearish, it is thought to be a bullish signal.

Under normal circumstances, the Barron's Confidence Index is between 100 and 200.

Volume of short sales represents a contrary opinion rule, because:

The Investment Setting

Security Markets

Participating in the Market

Investment Companies: Mutual Funds, Exchange-Traded Funds, Closed-End Funds, and Unit Investment Trusts

Economic Activity

Industry Analysis

Valuation of the Individual Firm

Financial Statement Analysis

Efficient Markets and Anomalies

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Put and Call Options

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

International Securities Markets

Investments in Real Assets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

A Comprehensive Analysis for Real Estate Investment Decisions

The Makeup of Institutional Investors

Filters