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MCQ 5

This document contains multiple choice and true/false questions about technical analysis. Technical analysis is the approach to stock selection based on analyzing stock price movements and volume data to forecast future price trends. It differs from fundamental analysis in that it focuses only on this published market data rather than a company's financials or business prospects. The two primary tools of technical analysis are price and volume.

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Rishad k
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18K views5 pages

MCQ 5

This document contains multiple choice and true/false questions about technical analysis. Technical analysis is the approach to stock selection based on analyzing stock price movements and volume data to forecast future price trends. It differs from fundamental analysis in that it focuses only on this published market data rather than a company's financials or business prospects. The two primary tools of technical analysis are price and volume.

Uploaded by

Rishad k
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Chapter 16

TECHNICAL ANALYSIS

Multiple Choice Questions

Overview

1. The oldest approach to common stock selection is:

a. fundamental analysis
b. technical analysis
c. random walk analysis
d. value analysis

2. Technical analysis reflects the idea that stock prices:

a. move upward over time.


b. move inversely over time.
c. move in trends.
d. move randomly.

3. Market data includes all of the following except:

a. number of shares traded.


b. earnings.
c. level of market indices.
d. stock price.

4. The two primary tools of a technical analyst are:

a. level of the market index and volume.


b. economic indicators and level of the market index.
c. price and volume.
d. price and technical indicators.

5. Conventional technical analysis emphasizes:

a. only the aggregate stock market.


b. either the aggregate stock market or individual stocks.
c. only individual stocks.
d. only corporate securities.

6. Technical analysis differs from fundamental analysis in that technical


analysis:

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Technical Analysis
a. is aimed at the market while fundamental analysis is aimed at individual
stocks.
b. is based on published market data and focuses on internal factors.
c. focuses on the long-term trends of production.
d. does not consider price and volume.

7. All of the following are assumptions made by technical analysts except:

a. Changes in trend are caused by shifts in supply and demand relationships.


b. Stock price movements are independent.
c. Security prices tend to move in trends.
d. Supply and demand of securities are determined by various factors.

8. Which of the following is not true regarding the Dow Theory?

a. It is intended to forecast the start of a primary movement.


b. It does not forecast how long a movement will last.
c. It has a very high success rate.
d. It is subject to many criticisms.

9. A support level is a price range:

a. at which a significant increase in demand for a stock is expected.


b. at which a significant increase in supply of a stock is expected.
c. below which a stock price cannot go.
d. above which a stock price cannot go.

10. In order to have confirmation of a major market trend under the Dow
Theory, the:

a. industrial and utility averages must confirm each other.


b. transportation and utility averages must confirm each. other.
c. utility average must lead the transportation average.
d. transportation and industrial average must confirm each other.

11. A principal weakness of the Dow Theory is:

a. its use of averages instead of indexes.


b. its attention to general market movements.
c. that it pays too much attention to primary trends.
d. the many versions that are available.

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Technical Analysis
12. Which of the following is true regarding the resistance level?

a. Resistance levels tend to develop due to profit taking.


b. It is the level at which a significant decrease in demand is expected.
c. It is the level at which a significant increase in supply is expected.
d. Resistance levels usually develop after a stock reaches a new low.

13. Volume and specific calendar time are not considered important in a:

a. pie chart.
b. point and figure chart
c. bar chart.
d. histogram.

14. One rule of thumb is that a stock is attractive when the relative strength
has improved for at least ---------------months.
a. 1
b. 2
c. 3
d. 4

15. Corrections are often followed by ________.

a. channel lines.
b. momentum.
c. reversals.
d. consolidation.

16. What is usually shown at the bottom of a bar chart?

a. a point and figure chart


b. advance/decline line
c. closing price
d. volume

17. Which of the following is not a contrary trading rule?

a. Relative strength ratio


b. Investment advisory opinions
c. Mutual fund liquidity positions
d. Put/call ratio

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Technical Analysis
18. Which of the following would be considered a strong bearish signal?

a. High mutual fund liquidity


b. Bullish advisory opinion
c. Low short interest ratio
d. Bearish advisory opinion

19. Conclusions about technical analysis suggest that:

a. it is difficult to justify technical analysis.


b. it has been found to be completely deficient.
c. stock price movements repeat themselves constantly.
d. there is complete agreement about the interpretation of technical signals.

True/False Questions

What Is Technical Analysis?

1. ………………. analysis focuses on economic and political factors which


are external to the market itself.

a. Technical
b. Fundamental
c. Industry
d. Economic

2. ……………… analysis focuses on timing and on the short run.

a. Technical
b. Fundamental
c. Industry
d. Economic

3. ……………… analysts agree with the fundamental analysts regarding the


usefulness of accounting data.

a. Technical
b. Fundamental
c. Industry
d. Economic

4. The Dow theory is intended to forecast the start but not the duration of a
primary movement.

Chapter Sixteen 207


Technical Analysis
a. Random Walk Hypothesis
b. Efficient market hypothesis
c. Dow theory
d. Efficient Frontier Theory

5. A bar chart is the simplest type of chart used in technical analysis.

a. True
b. False

6. In light of its high success rate, the Dow theory is seldom criticized.

a. True
b. False

7. Relative strength analysis is popular because it is generally not subject to


conflicting interpretations.

a. True
b. False

8. If a trend exhibits support and resistance levels simultaneously that appear


well defined, the trendlines are referred to as channel lines.

a. True
b. False

9. Secondary movements are often termed technical "corrections.

a. True
b. False

Technical Indicators

10. The cash position of mutual funds is a contrarian indicator.

a. True
b. False

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Technical Analysis

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