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Use the data below to construct the advance/decline line for the stock market. V

ID: 2775336 • Letter: U

Question

Use the data below to construct the advance/decline line for the stock market. Volume figures are in thousands of shares and are from November 2–6, 2009. (Input all amounts as positive values.)

                         

Stocks
Advancing

Advancing
Volume

Stocks
Declining

Declining
Volume

  Monday

1,831   

687,133

1,438   

596,144   

  Tuesday

2,225   

553,360

1,520   

450,885   

  Wednesday

1,837   

625,244

1,446   

721,137   

  Thursday

2,482   

1,116,422

552   

174,548   

  Friday

1,712   

512,450

1,474   

496,710   

                                   

Adv./Dec.     

Cumulative    

  Monday

  

  

  Tuesday

  

  

  Wednesday

  

  

  Thursday

  

  

  Friday

  

  

Construct the Arms ratio on each of the five trading days. (Round your answer to 3 decimal places. Input all amounts as positive values.)

  

Stocks
Advancing

Advancing
Volume

Stocks
Declining

Declining
Volume

  Monday

1,819    

691,343

1,524

598,193

  Tuesday

2,372    

453,360

1,957

452,973

  Wednesday

1,825    

625,744

1,532

721,549

  Thursday

2,458    

1,120,446

556

174,960

  Friday

1,760    

513,426

1,478

496,210

               

Arms ratio

  Monday

  

  Tuesday

  

  Wednesday

  

  Thursday

  

  Friday

  

The table below shows the closing monthly stock prices for Stock 1 and Stock 2 during 2009. Calculate the simple three-month moving average for each month for both companies. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the "$" sign in your response.)

  

Stock 1

Stock 2

  January

92.20

320.65

  February

99.60

355.43

  March

104.31

363.99

  April

114.64

387.06

  May

119.83

525.97

  June

115.74

447.06

  July

126.95

541.95

  August

128.02

518.06

  September

119.02

500.67

  October

134.93

547.59

  November

157.38

590.59

  December

167.98

622.00

       

        Stock 1

      Stock 2

  March

$   

$   

  April

  

  

  May

  

  

  June

  

  

  July

  

  

  August

  

  

  September

  

  

  October

  

  

  November  

  

  

  December

  

  

Calculate the exponential three-month moving average for both stocks where two-thirds of the average weight is placed on the most recent price. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the "$" sign in your response.)

  

Stock 1

Stock 2

  January

55.48

309.65

  February

61.42

341.13

  March

70.87

341.99

  April

81.20

354.06

  May

86.39

415.97

  June

82.30

414.06

  July

90.32

431.95

  August

91.39

454.59

  September

82.39

467.67

  October

98.30

503.81

  November

120.75

544.50

  December

131.35

589.00

  

           Stock 1

        Stock 2

  March

$   

$   

  April

  

  

  May

  

  

  June

  

  

  July

  

  

  August

  

  

  September

  

  

  October

  

  

  November

  

  

  December

  

  

Use the data below to construct the advance/decline line for the stock market. Volume figures are in thousands of shares and are from November 2–6, 2009. (Input all amounts as positive values.)

Explanation / Answer

Solution: To find out AD line we need to find out net advances or declines by sutracting number of advances and number of declines and them finding out their cumulatives at the end column. That coulmn of AD line now can be used to plot a graph.

For calculation Arms ratio we have to calculate AD ratio which is ratio of number of advances by decline and AD volume ratio which is ratio og advance volumes by decline. Then Arms ratio = AD ratio/AD volume ratio
    Stocks   Advancing   Stocks     Declining           
   Advancing   Volume   Declining   Volume   AD Ratio   AD Volume Ratio   Arms ratio
Monday   1,819     691,343   1,524     598,193     1.193569554   1.155718974   1.032751
Tuesday   2,372     453,360   1,957     452,973     1.212059274   1.000854356   1.211025
Wednesday   1,825     625,744   1,532     721,549     1.191253264   0.867223155   1.373641
Thursday   2,458     1,120,446   556     174,960     4.420863309   6.404012346   0.690327
Friday   1,760     513,426   1,478     496,210     1.190798376   1.034694988   1.150869

For three months moving average we can use this average formula = a+b+c / 3
       Stock 1   3Months Moving Average   Stock 2   3Months Moving Average
January      92.20      320.65       
February      99.60      355.43       
March      104.31   98.703333   363.99     363.99
April      114.64   106.18333   387.06     387.06
May      119.83   112.92667   525.97     525.97
June      115.74   116.73667   447.06     447.06
July      126.95   120.84   541.95     541.95
August      128.02   123.57   518.06     518.06
September      119.02   124.66333   500.67     500.67
October      134.93   127.32333   547.59     547.59
November      157.38   137.11   590.59     590.59
December      167.98   153.43   622.00     622.00

For calculating 3 months exponential moving average we need to use this formula

Where:

X = Current EMA (i.e. EMA to be calculated)

C = Current original data value

K = Smoothing Constant

P = Previous EMA

Smoothing constant can be caculated by using this formula:

K = 2 / (1+n)

therefore for this problem smoothing constant K = 2/(1+3) = 0.5 for n = 3 months

And then we can find the EMA like this:

    Stock 1      Stock 2   3 Months Exponential Moving Average
January   55.48   55.48   309.65       
February   61.42   58.45   341.13     325.39
March   70.87   66.15   341.99     341.56
April   81.20   76.04   354.06     348.025
May   86.39   83.80   415.97     385.015
June   82.30   84.35   414.06     415.015
July   90.32   86.31   431.95     423.005
August   91.39   90.86   454.59     443.27
September   82.39   86.89   467.67     461.13
October   98.30   90.35   503.81     485.74
November   120.75   109.53   544.50     524.155
December   131.35   126.05   589.00     566.75


  

Stocks Advancing Stocks Declining Net Advances AD Line Advancing Volume Declining Volume   Monday 1,831    687,133 1,438    596,144    393 393   Tuesday 2,225    553,360 1,520    450,885    705 1098   Wednesday 1,837    625,244 1,446    721,137    391 1489   Thursday 2,482    1,116,422 552    174,548    1930 3419   Friday 1,712    512,450 1,474    496,710    238 3657