Grading Summary

Question Type: # Of Questions:

Multiple Choice 22

Grade Details - All Questions

Question 1. Question : Investor overconfidence leads to

Student Answer: too little trading.

an overestimation of risk.

overly optimistic predictions.

narrow framing.

Question 2. Question : There is strong evidence that investors who trade frequently outperform the market.

Student Answer: True

False

Question 3. Question : The new highs-new lows indicator is based on prices over the past

Student Answer: week.

quarter.

year.

decade.

Question 4. Question : Charts are useful as a means of spotting developing trends.

Student Answer: True

False

Question 5. Question : Which one of the following statements is correct?

Student Answer: The weekend effect states that security prices tend to rise between Friday afternoon and Monday morning.

The market responds immediately to reflect the information contained in quarterly earnings reports.

Low P/E stocks tend to outperform high P/E stocks on a risk-adjusted basis.

The market fully anticipates the information contained in an earnings announcement prior to the actual announcement.

Question 6. Question : Stock returns tend to have a negative correlation over three-to-five year time periods.

Student Answer: True

False

Question 7. Question : The odd-lot theory supports buying into the market when the number of odd-lot trades rises.

Student Answer: True

False

Question 8. 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 9. 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 10. Question : An efficient market reflects

Student Answer: only historical information.

only the information related to events that have already occurred.

all publicly known information related to past events and announced future events.

all information including predictions about future information.

Question 11. Question : The efficient market hypothesis means that trades can be executed quickly, easily, and inexpensively.

Student Answer: True

False

Question 12. Question : A technical analyst tends to

Student Answer: employ multiple market measures in his/her analysis.

concentrate on a sole market measure to determine market signals.

concentrate solely on buy signals in the market.

forward test their theories to validate their validity.

Question 13. Question : Trading securities based on inside information may get you jail time.

Student Answer: True

False

Question 14. Question : In an efficient market, the only means of achieving high returns is to invest in high-risk securities.

Student Answer: True

False

Question 15. Question : Which one of the following statements is correct?

Student Answer: A point-and-figure chart depicts all of the closing prices of a stock over a period of time.

A point-and-figure chart consists of columns of X's and O's.

A typical bar chart uses vertical bars to show the closing price as well as the change in price from the previous day.

A sell signal occurs when prices break though a resistance line on a chart pattern.

Question 16. Question : Stocks with higher growth forecasts tend to outperform those stocks to which analysts assign lower growth forecasts.

Student Answer: True

False

Question 17. Question : The market reaction to quarterly earnings announcements tends to support the strong form of the efficient market hypothesis.

Student Answer: True

False

Question 18. Question : Technical analysis makes extensive use of accounting information.

Student Answer: True

False

Question 19. Question : One market theory says that if the NFL wins the Super Bowl, we will have a bear market.

Student Answer: True

False

Question 20. 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 21. 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 22. Question : The relative strength index compares a security's price relative to itself over a period of time.

Student Answer: True

False