The on balance volume (OBV) indicator
A) considers only the amount of daily trading volume.
B) indicates an up market when heavy volume accompanies price increases.
C) is divergent when the OBV is falling and prices are also falling.
D) rises by 10,000 on a day when the trading volume is 5,000 shares and the price rises by $2.

Question

Quizplus · Accepted Answer

The OBV indicator is a momentum indicator that uses volume flow to predict changes in stock price. It indicates an up market when there is heavy volume on days when the price increases, as it suggests buying pressure. Choices A, C, and D are incorrect because OBV combines price direction with volume, divergence typically refers to a discrepancy between OBV trends and price trends (not when both are falling), and the OBV calculation does not directly incorporate the price change in dollars or the exact volume number in its rise or fall, but rather the direction of volume flow based on price movement.

The on Balance Volume (OBV) Indicator