- CFA Exams
- CFA Level I Exam
- Study Session 19. Portfolio Management (2)
- Reading 56. Technical Analysis
- Subject 1. Definition and Scope
CFA Practice Question
A basic assumption of technical analysis in contrast to fundamental analysis is that ______
A. financial statements provide information crucial in valuing a stock.
B. aggregate supply of and demand for goods and services are key determinants of stock value.
C. security prices move in patterns which repeat over long periods.
Explanation: Technical analysis assumes that patterns are repeatable and prices can be projected.
User Contributed Comments 7
| User | Comment |
|---|---|
| murli | A is a major difference between Fundamental and technical, it is NOT an assumption of Technical. |
| Spain81 | While A is true, you have to pick the best answer possible and the last choice stands out so much more than A does. |
| meiko | technical analysis keyword: trends. and trends are synonymous to patterns. see this question is really very basic. |
| mtcfa | While A is a critical difference between the two methods, it is in incorrect because it is NOT an assumption of technical analysis. The question is looking for an assumption of technical analysis. |
| andy4cfa | "aggregate supply of and demand for" is also wrong because the technical analysis's assumption is that: the supply and demand *solely* determines the market value instead of just a *key* determinant |
| NinaB | The question is really; what is an assumption of T-analysis and NOT F-analysis. "aggregate supply of and demand for" is ackonwledged by both. The correct answer is assumption for T-analysis only. |
| Shaan23 | thanks andy... I was racking my brain due to that.... |