CSC Fundamental and Technical Analysis 5

Question 1

Which approach to stock analysis begins by evaluating broad macroeconomic conditions before examining individual companies?

Accepted Answer

Top-down analysis

Answer

Top-down analysis starts with the macroeconomy, narrows to sectors, then selects individual stocks, moving from the general to the specific.

Question 2

The Efficient Market Hypothesis (EMH) in its semi-strong form states that stock prices reflect:

Accepted Answer

All publicly available information

Answer

Semi-strong EMH holds that prices incorporate all publicly available information, making fundamental and technical analysis unable to generate consistent excess returns.

Question 3

In technical analysis, Bollinger Bands widen when:

Accepted Answer

Market volatility increases

Answer

Bollinger Bands are based on standard deviation; when volatility rises, the bands widen, and when volatility is low, the bands contract.

Question 4

When performing comparable company analysis, an analyst would most likely use which multiple to value a company with no positive earnings?

Accepted Answer

EV/EBITDA or EV/Revenue

Answer

EV/Revenue or EV/EBITDA multiples are used when a company has negative earnings, since a P/E ratio is meaningless with no positive net income.

Question 5

A 'golden cross' is considered a bullish signal because it indicates:

Accepted Answer

The short-term moving average has crossed above the long-term moving average

Answer

A golden cross occurs when the 50-day moving average crosses above the 200-day moving average, signaling strengthening upward momentum.

CSC - Canadian Securities Course Practice Test

CSC - Canadian Securities Course Practice Test

CSC Fundamental and Technical Analysis 5