On day 1,the stock price of Ford was $81 and the automotive stock index was 324.On day 2,the stock price of Ford was $85 and the automotive stock index was 335.Consider the ratio of Ford to the automotive stock index at day 1 and day 2.Ford is __________ the automotive industry and technical analysts who follow relative strength would advise __________ the stock.
A) outperforming, buying
B) outperforming, selling
C) underperforming, buying
D) underperforming, selling

Question

Quizplus · Accepted Answer

The ratio of Ford to the automotive stock index on day 1 was (81/324) = 0.25
The ratio of Ford to the automotive stock index on day 2 was (85/335) = 0.25
Since the ratio remained the same, I can say that Ford is outperforming the automotive industry.
Also, since the ratio of Ford to the automotive stock index is increasing, technical analysts who follow relative strength would advise buying the stock.

On Day 1,the Stock Price of Ford Was $81 and the Automotive