Chaminade Univ MBA 754 (Investment Mgmt) Week 9 – Ch 09 Homework (Graded)
Grading SummaryQuestion Type: # Of Questions: True/False 12 Multiple Choice 18 Grade Details - All QuestionsQuestion 1. Question : An oversold market is generally considered to be overvalued. Student Answer: True False Question 2. Question : The advance/decline line is be used to time both the purchase and the sale of securities. Student Answer: True False Question 3. Question : The market reaction to quarterly earnings announcements tends to support the strong form of the efficient market hypothesis. Student Answer: True False Question 4. Question : The Dow Theory is used to predict when the markets will change direction based on the long-term trends in the market. Student Answer: True False Question 5. Question : In an efficient market, fundamental analysis still provides value to an investor. Student Answer: True False Question 6. Question : Which one of the following statements concerning the random walk hypothesis is correct? Student Answer: Stock price movements are predictable but only over short periods of time. Random price movements support the weak form efficient market hypothesis. Stock prices in general follow repetitive patterns but the actions of individual investors are random in nature. Random price movements indicate that investors can earn abnormal profits on a routine basis. Question 7. Question : Which one of the following relative strength values would most indicate that a stock is oversold? Student Answer: 120 80 20 -20 Question 8. Question : The random walk hypothesis Student Answer: implies that security analysis is unable to predict future market behavior. suggests that random patterns appear but only over long periods of time. has been disproved based on recent computer simulations. supports the notion that random price movements are indicative of inefficient markets. Question 9. Question : The breadth of the market refers to the spread between the number of stocks advancing and those declining in value. Student Answer: True False Question 10. Question : Investors who obsessively monitor their last few stock purchases while paying little attention to the rest of their portfolio are exhibiting the tendency known as Student Answer: overconfidence. narrow framing. loss aversion. representativeness. Question 11. Question : There is strong evidence that investors who trade frequently outperform the market. Student Answer: True False Question 12. Question : Based on the semi-strong form of the efficient market theory, an investor reacting immediately to a news flash on the television generally Student Answer: can make an abnormal profit. is guaranteed to make a reasonable profit. is too late to make an exceptional profit. will suffer a loss. Question 13. Question : One type of chart designed to keep track of emerging price patterns which has no time dimension and uses a series of X's and O's is known as a Student Answer: bear-and-bull chart. point-and-figure chart. peak-and-trough chart. flagged movement chart. Question 14. Question : Investors who buy mutual funds that have had large gains over the last few years are exhibiting a tendency known as Student Answer: overconfidence. narrow framing. loss aversion. representativeness. Question 15. Question : On a given day, 200 of the S&P 500 stocks were up, 300 were down. Volume for up stocks was 500 million, volume for down stocks was 700 million. The Trading Index or TRIN for that day was Student Answer: .48. .70 .93 3.5 Question 16. Question : The practice of charting focuses on Student Answer: I only I, II and IV only I, II and III only I, II, III and IV Question 17. Question : Evidence suggests that growth stocks tend to outperform value stocks. Student Answer: True False Question 18. Question : The odd-lot theory supports buying into the market when the number of odd-lot trades rises. Student Answer: True False Question 19. Question : A technical analyst might have an interest in which of the following? Student Answer: I and III only I, II and IV only I, II and III only I, II, III and IV Question 20. Question : The strong form of the efficient market hypothesis contends that Student Answer: a select few institutional investors can earn abnormal profits. abnormal profits are randomly distributed. no one can consistently earn a profit. no one can consistently earn abnormal profits. Question 21. Question : Stocks of small companies have a historical tendency to do especially well in the month of January. Student Answer: True False Question 22. Question : Which of the following are included in technical analysis? Student Answer: I and II only II and III only I, II and III. I, II, and IV Question 23. Question : Which one of the following combinations best signals a strong market? Student Answer: I and III I and IV II and III II and IV Question 24. Question : The tendency to hold onto losing stocks in the hope that they will recoup is called Student Answer: loss aversion. representativeness. narrow framing. biased self-attribution. Question 25. Question : Even after adjusting for risk,________ firms earn have, over long periods of time, earned higher returns than ________ firms. Student Answer: small, large large, small new, old old, new Question 26. Question : Technical analysts consider the stock market to be strong when volume ________ in a rising market and ________ during a declining market. Student Answer: increases; increases increases; decreases decreases; increases decreases; decreases Question 27. Question : Historically higher returns on the stocks of small companies can be completely explained by their higher risk. Student Answer: True False Question 28. Question : One of the calendar effect market anomalies indicates that ________ in value during January. Student Answer: large cap stocks tend to decline equities in general tend to decline small cap stocks tend to increase equities in general tend to increase Question 29. Question : Which one of the following statements is correct concerning moving averages? Student Answer: The longer the time period under consideration, the more sensitive the moving average is to daily price fluctuations. A simple moving average is computed as the arithmetic mode. The shorter the time period under consideration, the easier it is to spot long-term price trends. A moving average helps remove short-term fluctuations from the analysis. Question 30. Question : You are most likely better off doing the opposite of what most investment newsletter experts advise doing. Student Answer: True False