Question 1

On a given day, 200 of the S&P 500 stocks were up, 300 were down.Volume for up stocks was 500 million, volume for down stocks was 700 million.The Trading Index or TRIN for that day was

Accepted Answer

The answer of On a given day, 200 of the...

Question 2

Which one of the following statements is correct concerning the mutual fund cash ratio (MFCR)?

Accepted Answer

A low MFCR indicates that the fund has less cash or liquid assets on hand, which means that fund managers might be forced to sell securities quickly to meet the redemption requests of investors. This could lead to potential losses for the fund and its investors. Therefore, a low MFCR is generally considered a negative signal for the mutual fund. Option A is incorrect because a lower MFCR indicates that the market may be weaker, not stronger. Option B is incorrect because the formula is incorrect - the MFCR is actually the percentage of a fund's assets that is held in cash or cash equivalents. Option D is incorrect because there is no specific threshold for an MFCR value that is considered bearish.

Question 3

What is the ten-day simple moving average if the latest daily closing prices are $5, $7, $8, $5, $4, $6, $7, $8, $9, $10?

Accepted Answer

The answer of What is the ten-day simple moving average...

Question 4

A sell signal is indicated by a security's price

Accepted Answer

A sell signal is indicated by a security's price falling below the moving average.

Question 5

The on balance volume (OBV)indicator

Accepted Answer

The on balance volume (OBV) indicator is used to confirm price trends. It tracks the cumulative volume of trades in a market, and if it aligns with the prevailing price trend, it indicates that the trend is likely to continue. If it diverges from the trend, it could signal a forthcoming reversal. However, it is not a leading indicator of future market movements and is not a contradictory indicator. It does not relate to the advance-decline spread.

Question 6

Which one of the following statements is correct concerning moving averages?

Accepted Answer

A moving average is a tool used to smooth out price data by filtering out short-term price fluctuations that are noise, and highlight long-term trends. The shorter the time period under consideration, the more sensitive the moving average is to daily price fluctuations. On the other hand, the longer the time period under consideration, the more it removes short-term fluctuations from the analysis. Therefore, statement A is incorrect. A simple moving average is computed as the arithmetic average, not the mode, so statement B is also incorrect. Statement C is also incorrect because the shorter the time period under consideration, the more sensitive it is to daily price fluctuations, making it harder to spot long-term price trends.

Question 7

Which one of the following statements concerning technical indicators is true?

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The answer of Which one of the following statements concerning...

Question 8

Which one of the following statements is correct?

Accepted Answer

A point-and-figure chart is a type of chart used in technical analysis of stock prices. It consists of columns of X's and O's, representing increases and decreases in price, respectively. The chart does not depict all of the closing prices over a period of time, but rather focuses on significant price movements. Choices A, C, and D are incorrect.

Question 9

The on balance volume (OBV)indicator

Accepted Answer

The OBV indicator considers both the price and volume of a security and is used to confirm price trends. It indicates an up market when heavy volume accompanies price increases. Therefore, option B is correct. Option A is incorrect as the OBV considers both price and volume. Option C is incorrect as the OBV is convergent when it follows the trend of the prices. Option D is incorrect as the OBV is calculated as a cumulative total and does not rise by the same amount as the trading volume.

Question 10

Explain why technical analysts use charts so extensively.

Accepted Answer

The answer of Explain why technical analysts use charts so...

Question 11

According to chartists, a breakout below a support level

Accepted Answer

According to chartists, a breakout below a support level is seen as a strong bearish signal and is interpreted as a sell signal. It indicates that there is a significant shift in the demand-supply equation, with increasing selling pressure causing the price to break below the support level.

Question 12

Which of the following are contrary indicators?

Accepted Answer

Contrary indicators are used to identify when the majority of investors are likely wrong. The investment newsletter sentiment index and odd-lot trading are considered contrary indicators because they reflect the sentiment of less informed or smaller investors, who are often wrong at market turning points.

Quiz 9: Market Efficiency, Behavioral Finance, and Technical Analysis