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43) According to Dow theory, which one of the following is the primary means of eliminating
secondary market trends?
A) corrections
B) confirmations
C) continuations
D) conversions
E) coordinated trades
44) If you are a proponent of the Elliott wave theory, you are most apt to do which one of the
following?
A) sell on wave 2
B) sell on wave 3
C) buy on wave A
D) buy on wave 2
E) buy on wave 5
45) According to technical analysis, which one of the following is best seen as a buying
opportunity?
A) a breakout of a resistance level
B) an MSI value of 0.1 or less
C) a downward sloping advance/decline line
D) a flat advance/decline line
E) top of Elliott wave 5
46) You recently heard a news announcer state that the market is approaching its support level.
Which one of the following is the best interpretation of that statement?
A) The market is approaching the lowest level that is reasonably expected.
B) The federal government will step in to help the market retain its value should the market slip
much further.
C) The market is almost at a peak and is expected to start declining in the near future.
D) The market is almost to the point where trading will be suspended temporarily.
E) The market is almost equivalent in value to the international markets so price stabilization is
expected.
47) Which one of the following advance/decline lines is the most bullish signal?
A) relatively flat
B) slightly upward sloping
C) slightly downward sloping
D) steeply upward sloping
E) steeply downward sloping
48) Which of the following are bullish indicators?
I. flat advance/decline line
II. breakout of a support level
III. Arms ratio of .38
IV. heavy advancing volume
A) I and II only
B) III and IV only
C) I and III only
D) II and III only
E) I and IV only
49) If the closing tick of the day is +32, this means that the:
A) DJIA ended the day up 32 basis points.
B) discount rate at the end of the day was 3.20 percent.
C) number of stocks closing on an uptick was 32.
D) number of stocks closing on an uptick exceeded those closing on a downtick by 32.
E) number of stocks closing on an uptick was 32 more than on the prior trading day.
50) Which one of the following Arms values is the most bearish?
A) .28
B) .45
C) .88
D) 1.03
E) 1.26
51) For the past year, a particular stock has a relative strength value of 1.03 as compared to the
market. This means that the stock:
A) increased in value 3 percent more than the market for the day.
B) has 3 percent more risk than the average security.
C) outperformed the market for the period.
D) had 3 percent higher trading volume on a growth basis as compared to the market.
E) is selling for 103 percent of the market value per share.
52) A "block trade" is a trade in excess of how many shares?
A) 1,000
B) 5,000
C) 10,000
D) 50,000
E) 100,000
53) Which one of the following statements is correct concerning an open-high-low-close bar
chart?
A) The prices indicated by the two horizontal lines are the maximum and minimum daily prices.
B) The upper trendline indicates the support level.
C) If the overall price movement is downward, the lower trendline is called the channel line.
D) If the overall price movement is upward, the upper trendline is called the head line.
E) The final price of the day is indicated by a horizontal line to the left side of the vertical line.
54) According to technical analysts, pricing patterns such as the head and shoulders are
indicators of potential:
A) reversals from the main trend line.
B) upcoming corrections which will return the market to the current main trend line.
C) increasing strength for the main trend line.
D) decreasing market activity.
E) increasing market activity.
55) Which one of the following is correct concerning a head and shoulders top pattern?
A) The outside of the right shoulder is a bullish signal.
B) The shoulders are higher than the head.
C) The left shoulder must be higher than the right shoulder, but lower than the head.
D) A piercing of the neckline is a reversal signal.
E) The trend line must be relatively flat throughout the pattern.
56) Which one of the following statements is correct regarding moving averages?
A) The 50-day moving average reflects the long-term trend of the market.
B) An exponential moving average is a weighted average.
C) Moving averages are used primarily to measure trading volume.
D) Short-term and long-term moving averages always move in the same direction.
E) Moving averages are generally computed using average daily prices.
57) Assume the 50-day moving average is currently intersecting the 200-day moving average.
Also assume the 50-day average is downward sloping and the 200-day average is upward
sloping. Which one of the following statements is accurate based on this information?
A) The 50-day moving average is bullish.
B) The short-term forecast is bullish.
C) The long-term trend may be preparing to change.
D) The long-term outlook is bearish.
E) The short-term trend will change to match the long-term trend.
58) 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.
59) A stock's price has been relatively constant for an extended period of time. In this instance,
the Bollinger bands are:
A) relatively close to each other.
B) non-existent.
C) vertical.
D) steeply upsloping.
E) steeply downsloping.
60) Investors who use the MACD indicator as a signal for trading are most apt to buy a security
when the MACD:
A) equals zero.
B) is equal to 1.0.
C) rises above the signal line.
D) parallels the signal line.
E) falls below the signal line.
61) Which of the following are considered in the computation of money flows?
I. last trade price
II. current trade price
III. volume of each trade
IV. time of each trade
A) I and IV only
B) II and III only
C) I, II, and III only
D) II, III, and IV only
E) I, II, III, and IV
62) Assume a stock's price remains relatively stable while the money flow becomes highly
positive. Which one of the following is most expected given this scenario?
A) price decrease
B) stable price
C) price increase
D) increasing trading volume
E) decreasing trading volume
63) Fibonacci numbers:
A) are all odd numbers of increasing value.
B) result in a golden mean which has an approximate value of 1.618.
C) are the square roots of the products of the two previous numbers in the series.
D) result in a phi which is approximately equal to .382.
E) are a series of numbers which are equal to the product of the two previous numbers.
64) Some technical analysts use Fibonacci numbers to predict:
A) primary trend breakthroughs.
B) market turnarounds.
C) secondary market trend lines.
D) relative performance values.
E) resistance and support levels.
65) Which one of the following is seen as a bearish indicator?
A) decreased short selling
B) increased buying by odd-lot traders
C) shorter skirt lengths
D) a Super Bowl win by a National Football League team
E) tight Bollinger bands
66) A survey of 75 of your fellow classmates determines that 29 of them are bullish on the
market while the remainder is bearish. What is the market sentiment index for this group of
individuals?
A) .28
B) .33
C) .44
D) .61
E) .70
67) A recent survey indicates that 1,731 people are bearish on the market for every 1,000 that are
bullish. What is the value of the market sentiment index based on this information?
A) .36
B) .43
C) .57
D) .63
E) .75
