CSC Fundamental and Technical Analysis 4

Question 1

Which technical indicator measures the rate of change in a security's price momentum?

Accepted Answer

MACD (Moving Average Convergence Divergence)

Answer

MACD measures momentum by showing the relationship between two exponential moving averages, with crossovers signaling potential trend changes.

Question 2

In fundamental analysis, the quick ratio excludes which current asset?

Accepted Answer

Inventory

Answer

The quick ratio excludes inventory because it may not be quickly convertible to cash, providing a more conservative liquidity measure than the current ratio.

Question 3

Fundamental analysts use the DuPont formula to decompose return on equity into which three components?

Accepted Answer

Net profit margin, asset turnover, and financial leverage

Answer

The DuPont formula breaks ROE into net profit margin × asset turnover × equity multiplier (leverage), revealing drivers of profitability.

Question 4

In technical analysis, 'volume' is most useful for:

Accepted Answer

Confirming the strength or weakness of a price move

Answer

Volume confirms price movements — a breakout on high volume is more reliable than one on low volume, as it indicates broader market participation.

Question 5

Which of the following is an example of a leading economic indicator used in top-down fundamental analysis?

Accepted Answer

Building permits issued

Answer

Building permits are a leading indicator because they predict future construction activity before it occurs, unlike lagging indicators like unemployment.

CSC - Canadian Securities Course Practice Test

CSC - Canadian Securities Course Practice Test

CSC Fundamental and Technical Analysis 4