CSC Fundamental and Technical Analysis 3

Question 1

Which financial statement would an analyst primarily use to assess a company's liquidity position?

Accepted Answer

Balance sheet

Answer

The balance sheet shows current assets and current liabilities, which are used to calculate liquidity ratios like the current and quick ratios.

Question 2

Relative Strength Index (RSI) values above 70 typically signal a stock is:

Accepted Answer

Overbought and potentially due for a pullback

Answer

An RSI above 70 indicates overbought conditions, suggesting the security may be overvalued and due for a price correction.

Question 3

The price-to-book (P/B) ratio compares a stock's market price to its:

Accepted Answer

Net asset value per share

Answer

P/B ratio divides market price per share by book value per share (total equity divided by shares outstanding), showing how much investors pay per dollar of net assets.

Question 4

A 'head and shoulders' pattern in technical analysis signals a potential:

Accepted Answer

Reversal from an uptrend to a downtrend

Answer

The head and shoulders pattern is a bearish reversal formation with three peaks where the middle peak is the highest, signaling the uptrend is ending.

Question 5

Free cash flow is best defined as:

Accepted Answer

Operating cash flow minus capital expenditures

Answer

Free cash flow = Operating Cash Flow − Capital Expenditures, representing cash available after maintaining and expanding the asset base.

CSC - Canadian Securities Course Practice Test

CSC - Canadian Securities Course Practice Test

CSC Fundamental and Technical Analysis 3