Question

Dow Theory is considered technical analysis rather than fundamental analysis because it​ _______. A. requires analysis of multiple stocks to generate its results B. requires complicated computer programs to generate its results C. relies on forecasting future profits of firms in order to forecast future stock prices D. relies on patterns of past stock prices to predict future stock prices Would an investor be able to earn an​ above-average return on her stock investments by selling industrial stocks whenever she saw declines in transportation stocks and buying industrial stocks whenever she saw increases in transportation​ stocks? A. ​Yes, the long history associated with this theory illustrates its ability to guarantee​ above-average returns. B. ​No, this strategy neglects all available information except for past stock prices. C. ​No, this strategy only focuses on expected future returns and neglects past performance. D. ​Yes, rational expectations theory predicts that investors employing technical analysis are likely to earn​ above-average returns.

Answer 1

1. Option d is correct
It relies on past patterns of past stock to predict future stock prices

2. Option b is correct
No this strategy neglects all available information except for past stock performance.

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