Deck 10: Bond Prices and Yield

Question 1

A trin ratio of less than 1.0 is considered as a _________.

A) bearish signal
B) bullish signal
C) bearish signal by some technical analysts and a bullish signal by other technical analysts
D) bullish signal by some fundamentalists
E) c and d

Answer 1

B

Question 2

A support level is _________________.

A) a level beyond which the market is unlikely to rise
B) a level below which the market is unlikely to fall
C) an equilibrium price level justified by characteristics such as earnings and cash flows
D) the through of a market wave or cycle

Answer 2

B

Question 3

After taking a position based on an identified trend,technical traders generally ____________________.

A) continue with it until a reversal of the trend is indicated
B) continue with it until price stabilizes.
C) continue until trading volume begins to decline
D) none of these

Answer 3

A

Question 4

_____________ cumulative tally of the number of advancing stocks minus declining stocks.

A) the advance decline line is a
B) the market volume is a
C) the trin ratio is a
D) none of these are the

Question 5

Information processing errors consist of
I)forecasting errors
II)overconfidence
III)conservatism
IV)framing

A) I and II
B) I and III
C) III and IV
D) IV only
E) I,II and III

Question 6

Technical analysis focuses on _______________________.

A) finding opportunities for risk-free investing
B) changing attitudes regarding economic and political forces
C) changing prospects for earnings or growth of particular firms or industries
D) regulatory issues

Question 7

According to Dow theory,primary trends are _________________.

A) daily fluctuations which are of little importance
B) short-term deviations from the underlying price trend line
C) long-term price movements lasting from months to years
D) none of these

Question 8

Dow theory is a technique that attempts to identify _________________.

A) long-term trends in stock market prices
B) short-term trends in stock market prices
C) long-term and short-term trends in stock market prices
D) risk-free trading opportunities

Question 9

According to Dow theory there are _____ key forces which simultaneously affect stock prices.

A) 2
B) 3
C) 4
D) 5

Question 10

A high amount of short interest is considered as a _____________.

A) bearish signal
B) bullish signal
C) bearish signal by some technical analysts and as a bullish signal by other technical analysts
D) none of these

Question 11

The Dow theory posits that the three forces that simultaneously affect stock prices are ____________.
I)primary trend
II)intermediate trend
III)momentum trend
IV)minor trend
V)contrarian trend

A) I,II,and III
B) II,III,and IV
C) III,IV and V
D) I,II,and IV
E) I,III,and V

Question 12

According to Dow theory,secondary trends are _________________.

A) daily fluctuations which are of little importance
B) short-term deviations from the underlying price trend line
C) long-term price movements lasting from months to years
D) none of these

Question 13

According to Elliot wave theory,the stock market behavior can be explained as _______________.

A) a series of medium-term wave cycles
B) a series of long-term wave cycles
C) a series of superimposed long-term and short-term wave cycles
D) none of these

Question 14

__________ was the grandfather of technical analysis.

A) Harry Markowitz
B) William Sharpe
C) Charles Dow
D) Benjamin Graham
E) none of these

Question 15

Which of the following phenomena followed by technical analysts is most consistent with the efficient markets hypothesis?

A) Elliot waves
B) resistance levels
C) support levels
D) self-destructing patterns

Question 16

If a person gives too much weight to recent information compared to prior beliefs,they would make ________ errors.

A) framing
B) selection bias
C) overconfidence
D) conservatism
E) forecasting

Question 17

Psychologists have found that people who make decisions that turn out badly blame themselves more when that decision was unconventional.The name for this phenomenon is

A) regret avoidance
B) framing
C) mental accounting
D) overconfidence
E) obnoxicity

Question 18

According to Dow theory,tertiary trends are __________________.

A) daily fluctuations which are of little importance
B) short-term deviations from the underlying price trend line
C) long-term price movements lasting from months to years
D) none of these

Question 19

_________ above which it is difficult for the market to rise.

A) book value is a value
B) resistance level is a value
C) support level is a value
D) a and b
E) a and c

Question 20

According to Kondratieff,the macro economy moves in a series of waves which recur at intervals of approximately ________________.

A) 18 months
B) 4 years
C) 8 years
D) 50 years

Question 21

_____________ focus more on past price movements of a firm's stock than on the underlying determinants of its future profitability.

A) credit analysts
B) fundamental analysts
C) systems analysts
D) technical analysts

Question 22

A long term movement of prices,lasting from several months to years is called __________.

A) a minor trend
B) an intermediate trend
C) a primary trend
D) none of these

Question 23

The ratio of (the average yield on 10 top-rated corporate bonds/the average yield on 10 intermediate-grade bonds)is called _________.

A) the bond price index
B) the confidence index
C) the relative strength index
D) none of these

Question 24

If you believed in the reversal effect,you should ___________.

A) buy bonds this period if you held stocks last period
B) buy stocks this period that performed poorly last period
C) buy stocks this period that performed well last period
D) do none of these

Question 25

The most common measure of ________ is the spread between the number of stocks which advance in price and the number of stocks which decline in price.

A) market breadth
B) market volume
C) odd-lot trading
D) short interest

Question 26

____________ is a measure of the extent to which a movement in the market index is reflected in the price movements of all stocks in the market.

A) Put-call ratio
B) Trin ratio
C) Breadth
D) Confidence index
E) All of these are correct.

Question 27

A trin ratio of less than 1.0 is considered as a _________.

A) bearish signal
B) bullish signal
C) bearish signal by some technical analysts and as a bullish signal by other technical analysts
D) none of these

Question 28

Since 1967,the stock market has typically _________ during the remainder of a year in years when an AFC (which is not an original NFL team)wins the Superbowl.

A) been highly volatile
B) gone down
C) gone up
D) remained unchanged

Question 29

Which of the following does not represent an important class of technical indicators?

A) productivity indicators
B) sentiment indicators
C) flow of funds indicators
D) market structure indicators

Question 30

According to technical analysts,a shift in market fundamentals will ___________.

A) be reflected in stock prices immediately
B) lead to a gradual price change that can be recognized as a trend
C) lead to high volatility in stock market prices
D) do none of these

Question 31

The advance-decline line is constructed by plotting __________________.

A) the number of advancing stocks against the number of declining stocks
B) the number of advancing stocks and the number of declining stocks against time
C) the number of advancing stocks minus the number of declining stocks against time
D) the cumulative total of advances minus declines against time

Question 32

An accumulation of credit balances in brokerage accounts is viewed by technical traders as a __________ indicator.

A) bullish
B) neutral
C) bearish
D) none of these

Question 33

Which of the following is considered a flow of funds indicator?

A) mutual fund cash position
B) short interest
C) odd-lot trading
D) put-call ratio

Question 34

When the market breaks through the moving average line from below,a technical analyst would probably suggest it is a good time to __________.

A) buy the stock
B) hold the stock
C) sell the stock
D) become a fundamental analyst rather than a technical analyst

Question 35

Which of the following is not a type of chart used by technical analysts?

A) point and figure chart
B) candlestick chart
C) box chart
D) all of these are types of charts used by technical analysts

Question 36

Congestion areas are associated with ________.

A) advance-decline lines
B) point and figure charts
C) the Elliot Wave theory
D) all of these

Question 37

Technical analysts consider a decrease in the put/call ratio as __________.

A) a bearish signal
B) a bullish signal
C) a bearish signal by some and bullish signal by others
D) a signal to enter the options market

Question 38

Which of the following is considered a sentiment indicator?

A) odd-lot trading
B) short interest
C) credit balances in brokerage accounts
D) relative strength

Question 39

Charting techniques are used by technical analysts to produce ____________ indicators.

A) sentiment
B) flow of funds
C) market structure
D) none of these

Question 40

On October 29,2009 there were 1,031 stocks that advanced on the NYSE and 610 that declined.The volume in advancing issues was 112,866,000 and the volume in declining issues was 58,188,000.The trin ratio for that day was ________ and technical analysts were likely to be ________.

A) 0.87,bullish
B) 0.87,bearish
C) 1.15,bullish
D) 1.15,bearish
E) None of these is correct.

Question 41

Tests of market efficiency have focused on ____________.

A) the mean-variance efficiency of the selected market proxy
B) strategies that would have provided superior risk-adjusted returns
C) results of actual investments of professional managers
D) strategies that would have provided superior risk-adjusted returns and results of actual investments of professional managers
E) the mean-variance efficiency of the selected market proxy and strategies that would have provided superior risk-adjusted returns

Question 42

On a particular day,there were odd-lot sales of 805,000 on the TSX and 948,000 odd-lot purchases.The odd-lot trading index is __________.

A) 0.46
B) 0.54
C) 0.85
D) 1.18

Question 43

__________ is a value below which the market is relatively unlikely to fall.

A) book value
B) resistance level
C) support level
D) none of these

Question 44

Technical traders view mutual fund investors as __________ market timers.

A) excellent
B) mediocre
C) neutral
D) poor

Question 45

On a particular day,there were 920 stocks which advanced on the TSX and 723 which declined.The volume in advancing issues was 80,846,000 and the volume in declining issues was 70,397,000.The trin ratio is __________ and technical analysts are likely to be __________.

A) 0.90,bullish
B) 0.90,bearish
C) 1.11,bullish
D) 1.11,bearish

Question 46

If mutual fund portfolios are heavy in cash,technical traders interpret this as a __________ signal.

A) buy
B) sell
C) hold
D) none of these

Question 47

An important assumption underlying the use of technical analysis techniques is that _________________.

A) security prices adjust rapidly to new information
B) security prices adjust gradually to new information
C) security dealers will provide enough liquidity to keep price changes relatively small
D) all investors have immediate and costless access to information

Question 48

When technical analysts say a stock has good "relative strength",they mean that in recent past __________.

A) it has performed well compared to its closest competitors
B) it has exceeded its own historical high
C) trading volume in the stock has exceeded the normal trading volume
D) it has outperformed the market index

Question 49

___________ is a value above which it is difficult for the market to rise.

A) book value
B) resistance level
C) support level
D) none of these

Question 50

_____________ on the Dow theory.

A) The Elliot wave theory is a recent variation
B) the theory of Kondratieff waves is a recent variation
C) both the Elliot wave theory and the theory of Kondratieff waves are recent variations
D) neither the Elliot wave theory and theory of Kondratieff waves are recent variations

Question 51

Generally,academics reject technical analysis as a means of forecasting security prices.Give some reasons to support this position and suggest some possible defenses of the approach.

Question 52

If prices are correct __________ and if prices are not correct __________.

A) there are no easy profit opportunities;there are no easy profit opportunities
B) there are no easy profit opportunities;there are easy profit opportunities
C) there are easy profit opportunities;there are easy profit opportunities
D) there are easy profit opportunities;there are no easy profit opportunities
E) None of these is correct.

Question 53

__________ is considered the grandfather of technical analysis.

A) Fischer Black
B) John Bratton
C) Charles Dow
D) Stanley Shapiro

Question 54

At the end of July,the average yields on 10 top-rated corporate bonds and 10 intermediate-grade bonds were 7.65% and 8.48% respectively.At the end of August,the average yields on 10 top-rated corporate bonds and 10 intermediate-grade bonds were 6.31% and 6.71% respectively.The confidence index __________ during August and technical analysts are likely to be ________.

A) increased,bullish
B) increased,bearish
C) decreased,bullish
D) decreased,bearish

Question 55

A daily fluctuation of little importance is called __________.

A) a minor trend
B) an intermediate trend
C) a primary trend
D) none of these

Question 56

On a particular day,there were 920 stocks which advanced on the TSX and 723 which declined.The volume in advancing issues was 80,846,000 and the volume in declining issues was 70,397,000.The common measure of market breadth is __________.

A) -10,449,000
B) -197
C) 197
D) 10,449,000

Question 57

On day 1,the stock price of Kinross was $83 and the golds sub-index was 324.On day 2,the stock price of Kinross was $85 and the golds sub-index was 335.Consider the ratio of Kinross to the golds sub-index at day 1 and day 2.Kinross is __________ the gold sector and technical analysts who follow relative strength would advise __________ the stock.

A) outperforming,buying
B) outperforming,selling
C) underperforming,buying
D) underperforming,selling

Question 58

Behavioral finance argues that ____________.

A) even if security prices are wrong it may be difficult to exploit them
B) the failure to uncover successful trading rules or traders cannot be taken as proof of market efficiency
C) investors are rational
D) even if security prices are wrong it may be difficult to exploit them,and the failure to uncover successful trading rules or traders cannot be taken as proof of market efficiency
E) All of these are correct.

Question 59

The put/call ratio is computed as ____________ and higher values are considered ____________ signals.

A) the number of outstanding put options divided by outstanding call options;bullish or bearish
B) the number of outstanding put options divided by outstanding call options;bullish
C) the number of outstanding put options divided by outstanding call options;bearish
D) the number of outstanding call options divided by outstanding put options;bullish
E) the number of outstanding call options divided by outstanding put options;bearish

Question 60

According to the odd-lot theory,an odd-lot trading index of less than 1.0 is considered as a __________.

A) bearish signal
B) bullish signal
C) bearish signal by some technical analysts and as a bullish signal by other technical analysts
D) none of these

Question 61

How do technicians and professionals try to defend the importance of technical analysis?

Question 62

How do you distinguish between fundamental analysis and technical analysis?