UGBA133 Final questions and answers graded A+ 2023/2024

UGBA133 Final What are Malkiel's General Approaches to investment - correct answer The firm-foundation theory and castles in the air theory. What is the firm-foundation theory - correct answer It revolves around the intrinsic value of the company. This can be found via the dividend discount model and a DCF. What is the castles in the air theory? - correct answer It revolves more around how a crowd of investors is likely to behave. Since future earnings and dividends are difficult to know, it is simply a beauty judging contest. What is technical analysis? - correct answer It is the study of price, volume and its distribution, with little regard to fundamentals that may inspire price movement. What is a trend? - correct answer It is the most commonly accepted aspect of technical analysis. It is al ine that connects a series of higher lows in an up trend or lower highs in a down trend. Moving average direction also used. What is support? - correct answer Support is usually a price where the price has not fallen lower in the relevant past. What is resistance? - correct answer It is usually a price where the price has not risen in the relevant past. After something breaks support it becomes the new resistance and after it breaks the resistance it becomes the new support. What is a breakout? - correct answer When resistance is exceeded. Resistance broken. What is a breakdown? - correct answer When price goes below support? What is basing? - correct answer A stabilizing period after decline What is consolidation - correct answer A stabilizing period after a run-up, considered a resting period What is a relative strength index? - correct answer A momentum gauge that compares magnitude of gains vs. declines. what are stochastics? - correct answer A momentum gauge that shows close relative to price range over a defined period. What is a commodity channel index? - correct answer Used to identify trend strength and cycle changes. What is a moving average convergance divergence (MACD)? - correct answer Illustrates trend strength and momentum by comparing two moving averages. What are price and volume indicators? - correct answer Money Flow: assesses positive or negative volume based on close position relative to trading range, applied over a defined period. Accumulation / distribution: assesses positive or negative volume based on close position relative to trading range. What are price channels? - correct answer Trend or price channels, usually drawn at a trend line and a parallel above or below that have contained price. What are examples of price channels? - correct answer Bollinger Bands, linera regression channels, Donchian channels, moving average envelopes. What is the Dividend Discount Model? - correct answer Value of Stock = Dividend per Share / (Discount Rate - Dividend Growth Rate)