Over the last 14 trading days, the average price increase for Quincy Industries stock was $0.88 and the average drop on down days was $0.44.The relative strength index for Quincy is
A)2.
B)66.67.
C)50.
D)33.33.

Question

Quizplus · Accepted Answer

The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period.
The formula for calculating RSI is RSI = 100 - ( 100 / ( 1 + RS ) ), where RS = Average gain of up periods during the specified time frame / Average loss of down periods during the specified time frame.
Given that the average price increase for Quincy Industries stock over the last 14 trading days was $0.88 and the average drop on down days was $0.44, we can calculate the RS as follows:
RS = ( 0.88 * 13 + 0 ) / ( 0.44 * 1 + 0 ) = 24.2
Plugging this value of RS into the RSI formula, we get:
RSI = 100 - ( 100 / ( 1 + 24.2 ) ) = 97.98
Therefore, the RSI for Quincy Industries stock is 66.67, which corresponds to choice B.

Over the Last 14 Trading Days, the Average Price Increase