CMT LEVEL 1 PRACTICE EXAM QUESTIONS WITH VERIFIED SOLUTIONS.

In constructing a point and Figure chart, a new entry is added only when? Price has moved equal to or more than the specified box size When the Stochastic indicator crosses below 20, it is signaling? The price is vulnerable to a reversal, but no action needs to be taken just yet. Brainpower Read More What principle describes a characteristic of related cycles Harmonics What formation is often called a coil? Symmetrical Triangle Bullish support lines on a 3-box reversal P & F chart are drawn at a _____ degree angle 45 The stock multiplication factor to adjust for a 30% stock dividend on a Point and Figure chart is 1.3 Which chart type uses more than one data point to plot a particular time interval? Candlesticks __________ mean is the best choice when averaging ratios that can be either fractions or percentages? Gemetric Kurtosis refers to the: Peakedness or flatness of a distribution Standard deviation is calculated by taking the square root of: Variance If the daily returns are constant, they can be converted to annualized risk by multiplying the daily return with the square root of: 252 The Sharpe ratio is a measure of: Performance Seasonality is a cycle that occurs: Yearly Fungibility is: Interchangeability of financial assets on identical terms The cycle, along with trend and _____________ comprise the three orderly components of price movement: Seasonality The global business cycle as identified by the Princeton Economic Institute measures: 8.6 Years Which of the following cycles is the longest by duration Kondratieff Wave Typically, the _________ year of a president's term posts the strongest returns for the market as per the Presidential Cycle: Third An effective way of detrending price data to identify cycles is to: Divide the closing prices by a moving average of those prices The New High-New Low index is calculated by: Subtracting New Lows from New Highs If the New High-New Low index declines while the broader market stays flat or rallies: It is time to take profits on long positions As per the theory of contrarian opinion, a high degree of consensus normally precedes: A trend reversal The Commitment of Traders report summarizes: Buying and selling by commercials and large speculators Which of the following statements accurately describe a support level? A price level where buying is strong enough to interrupt or reverse a decline A bear trap occurs when: Prices recapture a violated support level after sell signals are generated Serial correlation or autocorrelation means There is persistence in the data. The most important feature of the martingale process that makes it an appropriate model for EMH is: The absence of future price predictability Risk aversion refers to the assumption that investors prefer a portfolio with: Beta measures: How much an individual stock's return is related to the market return In EMH, technical traders can be thought of as a specific type of noise trader because: Technical traders are not rational traders When sentiment indicators point to extreme optimism: Liquidity is low From a sentiment perspective:From a sentiment perspective: Liquidity and psychology are inversely related For short-sellers of a security, market risk refers to the possibility of: An increase in value Slippage is normally attributed to: Liquidity risk Political risk refers to: The potential for legislative actions to deter companies from reaching their goals Yield refers to the projected annual return on a bond based on its: Current market price Treasury Inflation-Protected Securities (TIPS) are bonds whose _________ is adjusted based on the level on inflation (change in consumer prices): Principle An inverted yield curve has historically pointed toward: Economic slowdowns and recessions Treasury-bill returns come from: Price changes Debentures are a type of: Unsecured loans Companies can borrow for two years by selling: Medium-term notes In spot markets, commodities such as gold are sold for: Immediate delivery Which of the following commodities also acts as a barometer of an economy's prospects? Copper The benchmark grade of U.S. crude oil is commonly called: WTI Which of the following is a trade-weighted geometric index? U.S. dollar index