Bollinger bands depict a 2-standard-deviation bound around a moving average, making D the correct choice. A is incorrect because Bollinger bands do not reflect differences between two moving averages. B and E are incorrect because they do not accurately describe the purpose of Bollinger bands. C is incorrect because Bollinger bands are not a graphical representation of an exponential moving average.

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Bollinger Bands

Question 49

Multiple Choice

Bollinger bands:

A) graphically reflect the differences between two moving averages.
B) graphically depict the relative strength of a security as compared to the market.
C) are a graphical representation of an exponential moving average.
D) depict a 2-standard-deviation bound around a moving average.
E) are equal to the 20-day moving average plus or minus one standard deviation.

Correct Answer: