1.Which type of analysis requires the most subjective judgment on the part of the analyst to be successful?

A)   Technical analysis.

B)   Fundamental analysis.

C)   Financial statement analysis.

D)   GAAP analysis.

2.Which of the following is NOT a challenge to technical analysis?

A)   Interpreting technical trading rules is too subjective and the decision variables change over time.

B)   Price patterns can become self-fulfilling prophecies.

C)   During the 1990s the accounting profession continually changed and updated the GAAP standards, making analysis of accounting information more difficult than it had been historically.

D)   Empirical studies suggest that the stock market reacts very quickly to new information.

3.If a technical trading rule is successful in generating excess returns, the value of the trading strategy will most likely:

A)   increase as competition among technical traders using the rule increases and the self-fulfilling prophecy causes stock prices to increase.

B)   disappear as competition among technical traders using the rule increases and excess profits are traded away.

C)   decrease but not disappear completely because only a few technical traders will have the skill to use the successful rule.

D)   not change because only a few technical traders will have the skill to use the successful rule.

4.Most empirical studies of technical trading rules have found that past stock price patterns:

A)   do not repeat, and therefore technical analysis is profitable.

B)   repeat, and therefore technical analysis is not profitable.

C)   repeat, and therefore technical analysis is profitable.

D)   do not repeat, and therefore technical analysis is not profitable.

5.Which of the following is NOT a challenge to technical analysis?

A)   Interpreting the trading rules is reasoned and objective.

B)   If technical trading rules worked, the price movements would become a self-fulfilling prophecy.

C)   As many traders incorporated a successful strategy, its value would disappear.

D)   Past price patterns may not be repeated in the future.

答案和详解如下：

1.Which type of analysis requires the most subjective judgment on the part of the analyst to be successful?

A)   Technical analysis.

B)   Fundamental analysis.

C)   Financial statement analysis.

D)   GAAP analysis.

The correct answer was A)

One challenge to technical analysis is that interpreting the rules is too subjective and the decision variables change over time. Subjective judgment is a part of any kind of analysis, but technical analysis depends on it more than other types of security analysis.

2.Which of the following is NOT a challenge to technical analysis?

A)   Interpreting technical trading rules is too subjective and the decision variables change over time.

B)   Price patterns can become self-fulfilling prophecies.

C)   During the 1990s the accounting profession continually changed and updated the GAAP standards, making analysis of accounting information more difficult than it had been historically.

D)   Empirical studies suggest that the stock market reacts very quickly to new information.

The correct answer was C)

Technical analysis depends almost entirely on the analysis of data derived from stock market trading activity, including security prices and trading volume. It does not depend on accounting information, and therefore changes in GAAP do not affect the practice of technical analysis.

3.If a technical trading rule is successful in generating excess returns, the value of the trading strategy will most likely:

A)   increase as competition among technical traders using the rule increases and the self-fulfilling prophecy causes stock prices to increase.

B)   disappear as competition among technical traders using the rule increases and excess profits are traded away.

C)   decrease but not disappear completely because only a few technical traders will have the skill to use the successful rule.

D)   not change because only a few technical traders will have the skill to use the successful rule.

The correct answer was B)

If a technical trading proved to be successful, others would copy it. As more traders implement the strategy, its value will be neutralized. This is a significant challenge to technical analysis.

4.Most empirical studies of technical trading rules have found that past stock price patterns:

A)   do not repeat, and therefore technical analysis is profitable.

B)   repeat, and therefore technical analysis is not profitable.

C)   repeat, and therefore technical analysis is profitable.

D)   do not repeat, and therefore technical analysis is not profitable.

The correct answer was D)

The vast majority of studies have found that prices do not move in trends based on statistical tests of autocorrelation and runs. That is, past price patterns may not be repeated in the future. Efficient market followers say that the market appears to react quickly to the release of new information. This is a significant challenge to technical analysis.

5.Which of the following is NOT a challenge to technical analysis?

A)   Interpreting the trading rules is reasoned and objective.

B)   If technical trading rules worked, the price movements would become a self-fulfilling prophecy.

C)   As many traders incorporated a successful strategy, its value would disappear.

D)   Past price patterns may not be repeated in the future.

The correct answer was A)

Challenges to technical analysis trading rules are as follows:

§ There is no evidence that prices move in trends.

§ If technical trading rules worked, the price movements would become a self-fulfilling prophecy.

§ If technical trading proved to be successful, others would copy it and its value would be neutralized.

§ Interpreting the rules is too subjective, and the decision variables change over time.