CFA Practice Question

There are 221 practice questions for this study session.

CFA Practice Question

Technical analysis assumes that shifts in trends can be detected sooner or later in the action of the ______.
A. investment managers
B. market
C. both of these answers
Explanation: The four assumptions that support technical analysis are these:

1. The market value of any good or service is determined solely by the interaction of supply and demand for it.
2. Supply and demand are governed by numerous factors, both rational and irrational, including the economic variables relied upon by the fundamental analyst as well as opinions, models, and guesses. The market weighs all of these factors continually and automatically.
3. Disregarding minor fluctuations, the prices for individual securities and the overall value of the market tend to move in trends, which persist for appreciable lengths of time.
4. Prevailing trends change in reaction to shifts in supply and demand relationships. These shifts, no matter why they occur, can be detected sooner or later in the action of the market itself.

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