a. Use the data in Table 9.3 to compute a five-day moving average for Computers,

Question

a. Use the data in Table 9.3 to compute a five-day moving average for Computers, Inc. (Do not round intermediate calculations. Round your answers to 3 decimal places.)

b. Identify buy or sell signals indicating the day on which such signals are identified. Also indicate buying or selling price. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Trading Day Five Day
Moving Averages Trading Day Five Day
Moving Averages Days 1–5 Days 19–23 Days 2–6 Days 20–24 Days 3–7 Days 21–25 Days 4–8 Days 22–26 Days 5–9 Days 23–27 Days 6–10 Days 24–28 Days 7–11 Days 25–29 Days 8–12 Days 26–30 Days 9–13 Days 27–31 Days 10–14 Days 28–32 Days 11–15 Days 29–33 Days 12–16 Days 30–34 Days 13–17 Days 31–35 Days 14–18 Days 32–36 Days 15–19 Days 33–37 Days 16–20 Days 34–38 Days 17–21 Days 35–39 Days 18–22 Days 36–40 TABLE 9.3 Computers, Inc., stock price history Industry Index 50.0 50.1 50.5 50.4 51.0 50.7 50.5 51.1 51.5 51.7 51.4 51.7 52.2 52.0 53.1 53.5 53.9 53.6 52.9 53.4 Computers, Inc. Computers, Inc 19.63 21.50 Industry Index 54.1 54.0 53.9 53.7 54.8 54.5 54.6 54.1 54.2 54.8 54.2 54.8 54.9 55.2 55.7 56.1 56.7 56.7 56.5 56.1 Trading Day Trading Day 21 19.63 20 20.50 23 24 25 26 27 28 29 23.13 24 25.25 26.25 27 27,50 28 28.50 28 27.50 29 29.25 29.50 21.13 6 21.88 22.50 23.13 23.88 24.50 23.25 22.13 10 31 32 12 13 20.63 20.25 19.75 18.75 17.50 19 15 16 35 36 37 38 39 28.50 27.75 28 19 20

Explanation / Answer

a. Computation of five-day moving average for Computers, Inc. Trading Day Five Day Trading Day Five Day Moving Averages Moving Averages Days 1–5 20.652 Days 19–23 19.926 Days 2–6 21.126 Days 20–24 21.052 Days 3–7 21.502 Days 21–25 22.052 Days 4–8 21.902 Days 22–26 23.176 Days 5–9 22.128 Days 23–27 24.126 Days 6–10 22.678 Days 24–28 25.126 Days 7–11 23.178 Days 25–29 26 Days 8–12 23.452 Days 26–30 26.8 Days 9–13 23.378 Days 27–31 27.45 Days 10–14 23.152 Days 28–32 27.8 Days 11–15 22.502 Days 29–33 27.9 Days 12–16 21.652 Days 30–34 28.2 Days 13–17 20.952 Days 31–35 26.65 Days 14–18 20.276 Days 32–36 26.85 Days 15–19 19.376 Days 33–37 27.25 Days 16–20 19.05 Days 34–38 27.45 Days 17–21 18.926 Days 35–39 27.2 Days 18–22 19.276 Days 36–40 28.75 b. Identifying buy or sell signals indicating the day . Action Day Price 1 BUY 1 19.63 BUY 4 22 BUY 8 22.5 SELL 12 23.25 2 SELL 17 19.75 BUY 21 19.63 BUY 23 22 BUY 27 26.25 3 BUY 29 27.5 SELL 33 27.5 BUY 37 30 3 SELL 40 28

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