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