Ch. 16, Chapter 16: Technical Analysis
Multiple Choice Questions
1. The oldest approach to common stock selection is:
a. technical analysis
b. fundamental analysis
c. stochastic analysis
d. value analysis
Ans: a
Difficulty: Easy
Ref: Introduction
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.
Ans: c
Difficulty: Easy
Ref: What is Technical Analysis?
3. Technical analysis is sometimes called market or ________ analysis.
a. external.
b. internal.
c. stochastic.
d. qualitative.
Ans: b
Difficulty: Moderate
Ref: What is Technical Analysis?
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 earnings.
d. price and volume.
Ans: d
Difficulty: Moderate
Ref: What is Technical Analysis?
Chapter Sixteen 204
Technical Analysis
, 5. What do technical analysts believe is the best source of data to use in analyzing
stocks?:
a. Corporate earnings growth prospects.
b. Insider buying and selling of shares.
c. Current P/E ratios versus historical ratios.
d. The market itself.
Ans: d
Difficulty: Moderate
Ref: What is Technical Analysis?
6. Technical analysis differs from fundamental analysis in that 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.
Ans: b
Difficulty: Easy
Ref: What is Technical Analysis?
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 of one another.
c. Security prices tend to move in trends.
d. Supply and demand of securities are determined by various factors.
Ans: b
Difficulty: Difficult
Ref: What is Technical Analysis?
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.
Ans: c
Difficulty: Moderate
Ref: Stock Price and Volume Techniques
9. A support level is a price range:
a. at which a significant increase in demand for a stock is expected.
Chapter Sixteen 205
Technical Analysis
Multiple Choice Questions
1. The oldest approach to common stock selection is:
a. technical analysis
b. fundamental analysis
c. stochastic analysis
d. value analysis
Ans: a
Difficulty: Easy
Ref: Introduction
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.
Ans: c
Difficulty: Easy
Ref: What is Technical Analysis?
3. Technical analysis is sometimes called market or ________ analysis.
a. external.
b. internal.
c. stochastic.
d. qualitative.
Ans: b
Difficulty: Moderate
Ref: What is Technical Analysis?
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 earnings.
d. price and volume.
Ans: d
Difficulty: Moderate
Ref: What is Technical Analysis?
Chapter Sixteen 204
Technical Analysis
, 5. What do technical analysts believe is the best source of data to use in analyzing
stocks?:
a. Corporate earnings growth prospects.
b. Insider buying and selling of shares.
c. Current P/E ratios versus historical ratios.
d. The market itself.
Ans: d
Difficulty: Moderate
Ref: What is Technical Analysis?
6. Technical analysis differs from fundamental analysis in that 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.
Ans: b
Difficulty: Easy
Ref: What is Technical Analysis?
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 of one another.
c. Security prices tend to move in trends.
d. Supply and demand of securities are determined by various factors.
Ans: b
Difficulty: Difficult
Ref: What is Technical Analysis?
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.
Ans: c
Difficulty: Moderate
Ref: Stock Price and Volume Techniques
9. A support level is a price range:
a. at which a significant increase in demand for a stock is expected.
Chapter Sixteen 205
Technical Analysis
