Ultimate Guide to Prepare CMT-Level-II with Accurate PDF Questions [Dec 30, 2021]
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NEW QUESTION 130
_______________ as a risk measure results in an estimation of a price move in either direction.
- A. Put/ call parity
- B. Standard deviation
- C. Implied volatility
- D. Plurality index
Answer: C
NEW QUESTION 131
Which of the following is true of the Efficient Frontier concept in modern portfolio theory?
- A. It is a plot of the highest possible returns obtainable over a series of risk levels
- B. It centers on the premise that systemic risks in the financial markets can be diversified away.
- C. It is a 45 degree line plotting possible risk versus return
- D. It is unrelated to the risk free rate
Answer: A
NEW QUESTION 132
Which of the following is true of the harami pattern?
- A. All of the above
- B. The color of the real body is of utmost importance to its significance
- C. It is the opposite of the engulfing pattern
- D. It is considered a continuation pattern
Answer: C
NEW QUESTION 133
Which of the following is one of the advantages of computerized trading systems?
- A. All of the above
- B. Computerized trend following systems are profitable in all types of markets
- C. Computerized systems improve the interpretation of complex trading patterns
- D. Computerized trading systems remove the human emotion element
Answer: D
NEW QUESTION 134
Which of the following places the cycles in time length order?
- A. Alpha/beta, lunar, seasonal, presidential and Kondratieff
- B. Lunar, presidential, seasonal, alpha/beta and Kondratieff
- C. Kondratieff, presidential, alpha/beta, seasonal and lunar
- D. Alpha/beta, presidential, seasonal, lunar, and Kondratieff
Answer: A
NEW QUESTION 135
Which of the following best helps quantify the risk of a trading system?
- A. Longest Flat Time
- B. Maximum Cumulative Drawdown
- C. Maximum Favorable Excursions
- D. Length of Average Winning Trade
Answer: B
NEW QUESTION 136
Which of the following scale is used to plot data for investment and trading?
- A. A logarithmic scale is preferred
- B. A linear scale is preferred
- C. A logarithmic or a linear scale is preferred
- D. The arithmetic scale is preferred
Answer: D
NEW QUESTION 137
What is the main impediment to making objective trading decisions?
- A. Emotional considerations cloud judgment
- B. Failing to consider trading costs
- C. Lack of complete information
- D. Conflict between technical and fundamental models
Answer: A
NEW QUESTION 138
Which of the following is NOT true of the rising and falling three methods patterns?
- A. They are continuation patterns
- B. It starts with a long candle is followed by three short candles of the opposite color
- C. The pattern consists of a single candle
- D. The final day is another long candle of the opposite color of the three preceding small candles
Answer: C
NEW QUESTION 139
Which of the following would be a valid trading interpretation of top chart patterns?
- A. Sell whenever a major support level is tested but not breached
- B. Find a market with a long consolidating base and high volatility
- C. Sell when there is a major price retrenchment in a bull market
- D. Liquidate positions at prior major resistance points, top formations or the break of a major support line
Answer: D
NEW QUESTION 140
Which of the following is the reason behind choosing a logarithmic scale? Select the best possible answer.
- A. When intervals of trading activity are plotted over a limited span
- B. When short periods of trading activity are plotted
- C. When long or short periods of trading activity are plotted
- D. When long periods of trading activity are plotted
Answer: D
NEW QUESTION 141
Which of the following patterns resonate with the price action highlighted within the black box marked 'A' &
'B'?
- A. Bullish Engulfing & Shooting Star
- B. Bullish Engulfing & Hanging Man
- C. Piercing Line & Evening Star
- D. Piercing Line & hammer
Answer: C
NEW QUESTION 142
Which of the following is not a characteristic of a normal distribution? Choose the best possible answer.
- A. The mean, median, and mode are all located at the trough
- B. It is symmetric about the mean
- C. It extends infinitely in both directions
- D. It is bell-shaped, with its peak at the center
Answer: A
NEW QUESTION 143
What is the proper use of long-term charts versus daily price charts?
- A. Daily price charts allow for a better assessment of the price trend
- B. Long-term charts allow for a better assessment of the price trend
- C. Daily price charts allow for a thorough trend analysis
- D. Long-term charts are more useful for making trading decisions
Answer: B
NEW QUESTION 144
Which of the following is NOT true in chart interpretation:
- A. Chart patterns can be caused by commonly used trading techniques
- B. The goal is to find consistent, reliable and logical patterns
- C. A price chart is a representation of human behavior
- D. The behavioral aspects of prices are irrational
Answer: D
NEW QUESTION 145
The Sharpe Ratio is defined as?
- A. (expected return plus the risk free interest rate) divided by the standard deviation of returns
- B. (expected return times the risk free interest rate) divided by the standard deviation of returns
- C. (expected return divided by the risk free interest rate) divided by the standard deviation of returns
- D. (expected return minus the risk free interest rate) divided by the standard deviation of returns
Answer: D
NEW QUESTION 146
According to Charles Dow, what has been the main downfall of Wall Street investors?
- A. Pride of opinion
- B. Independent thinking
- C. Failure to stay the course
- D. Failure to abide by classic trading rules
Answer: A
NEW QUESTION 147
A trend based trading system where the trend is the slope of a straight line found using a least squares regression:
- A. N-day breakout
- B. Simple moving average
- C. Point and figure
- D. Linear regression slope
Answer: D
NEW QUESTION 148
Which of the following BEST describes equity market performance during the presidential election cycle:
- A. Market has a below average year during first year of president's term, posts its strongest returns during the pre-election year or in the election year
- B. Market has an above average year during first year of president's term, posts negative returns during the pre-election year and its strongest returns in election years
- C. Market has its strongest year during first year of president's term, posts its worst returns during the pre-election year and slightly negative returns in election years
- D. Market has a below average year during first year of president's term, posts its strongest returns in the second year and reasonably strong returns during the pre-election and election years
Answer: A
NEW QUESTION 149
Which of the following factors would NOT increase the predictive power of a dark cloud cover pattern?
- A. If the second day of trading opens above a resistance level and then fails
- B. The dark cloud cover occurs in the middle of a trading range
- C. Heavy volume on the second day indicates a buying blow o
- D. During a downtrend, a white real body with shaven head and bottom followed by a black body also with a shaven head and bottom
Answer: B
NEW QUESTION 150
A trend-based trading system where the trend is the weighting of the recent closing prices by a smoothing constant:
- A. N-day break
- B. Simple moving average
- C. Point and figure
- D. Exponential smoothing
Answer: D
NEW QUESTION 151
The bias under which, when an event has not occurred recently, the event is perceived as having zero or negligible probability of occurring in future, is categorized as:
- A. Sunk-cost bias
- B. Anchoring bias
- C. Saliency bias
- D. Framing bias
Answer: C
NEW QUESTION 152
Which of the following is NOT a valid volume interpretation technique?
- A. Remove volume associated with large price moves
- B. Utilize statistical techniques to predict prices based on volume
- C. Construct volume moving averages
- D. Remove low volume periods
Answer: A
NEW QUESTION 153
An evening doji star:
- A. Has a doji in the middle position
- B. Is completed by dojis leading out of the pattern
- C. Is completely comprised of dojis
- D. Has a doji in the last position
Answer: A
NEW QUESTION 154
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