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CMT Association CMT-Level-II Dumps

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Total 262 questions

CMT Level II Exam Questions and Answers

Question 1

What is the bearish counterpart to the Piercing Line candlestick pattern?

Options:

A.

3 Black Crows

B.

Dark Cloud Cover

C.

Hanging Man

D.

Shooting Star followed by an Inverted Hammer

Question 2

The MTA Code of Ethics applies to:

Options:

A.

Members only

B.

Affiliates only

C.

CMT candidates

D.

All of the above

Question 3

Which of the following is a true statement according to Elliott Wave Theory?

Options:

A.

The number of waves follows the Pythagorean theorem

B.

Ratios are used to define price objectives

C.

The rule of alternation states that up waves follow down waves

D.

Bear markets do not fall below the top of the prior fourth wave

Question 4

A trend based trading system where signals occur when the current high or low price exceeds the previous high or low price:

Options:

A.

Simple moving average

B.

Point and figure

C.

Swing breakout

D.

N-day breakou

Question 5

Which is NOT a measure of central tendency:

Options:

A.

Mean

B.

Median

C.

Mode

D.

Variance

Question 6

Based on the chart below, interpret the on balance volume (OBV) indicator with respect to price action:

Options:

A.

Prices are consolidating but OBV direction has turned higher which indicates accumulation by long term traders.

B.

Negative divergence between price and indicator suggest distribution is taking place at top.

C.

Prices are higher but OBV is sideways which can't be interpreted.

D.

Positive divergence between price and indicator suggest uptrend is weak and near reversal.

Question 7

In a meeting with his firm's senior research analyst, George Powel, a proponent of the CFA Institute Research Objectivity Standards (ROS), stated that the key objective of the ROS is to create voluntary reporting of

research practices that promote independent and objective research to CFA Institute on an annual basis. With regard to his statements about the objectives of the ROS.

Options:

A.

he is correct.

B.

he is incorrect.

C.

He is correct about the voluntary reporting aspect.

D.

He is correct about the independent and objective research aspect.

Question 8

Which of the following graphical representation is used to plot a single statistic?

Options:

A.

Point-and-figure charts

B.

Candlestick charts

C.

Bar charts

D.

Line charts

Question 9

Which of the following is true of moving average crossovers?

Options:

A.

It is considered bearish when a short term moving average crosses above a longer term moving average

B.

In a triple crossover trading system buying is signaled when the shortest term moving average crosses over one of the other moving averages

C.

The first crossover in a triple crossover system during an upside reversal is when the shortestterm moving average crosses above one of the other two averages

D.

Once a moving average system is optimized, it can be used for trading all markets

Question 10

Which of the following is a continuation pattern:

Options:

A.

Head and shoulders

B.

Wedge

C.

Broadening top

D.

V-bottom

Question 11

Which of the following asset classes as a leading indicator for the stock market?

Options:

A.

Bonds

B.

Bullion

C.

Precious metal

D.

Energy

Question 12

What is the importance of time in interpreting the saucer and peak patterns?

Options:

A.

Longer time periods increase the signaling importance of saucers but not of peaks

B.

Saucer bottoms are more valid when they form over a short time period

C.

Long time periods between market peaks and troughs reduce the potential for a market reversal

D.

Longer formation time periods increase the signaling importance of both saucers and peaks

Question 13

Which of the following is a FALSE statement about MACD?

Options:

A.

The signal line is also a moving average

B.

It is most useful in a trending market

C.

The calculation does not use any simple moving averages

D.

If MACD has had a positive value for more than 12 periods, this is predictive of a reversal.

Question 14

How would a technician utilize a support line which has been broken?

Options:

A.

A broken support line no longer has a valid technical interpretation

B.

The break in the support line would be a buy signal

C.

The support line now becomes a resistance line

D.

The break in the support line is of no technical importance

Question 15

Which of the following perfectly describes the pattern of a standard broadening formation with regards to pattern analysis?

Options:

A.

The upper trend line goes downwards and must have two peaks, the latter higher than the former

B.

The upper trend line goes upwards and must have two peaks, the latter higher than the former

C.

The upper trend line goes upwards and must have a single peak

D.

The upper trend line goes upwards and must have two peaks, the latter lower than the former

Question 16

A system in which the investor must be able to withstand a long series of losses.

Options:

A.

Martingale Betting System

B.

Parabolic System

C.

Directional Move System

D.

Pyramiding

Question 17

Which of the following scale is used to plot data for investment and trading?

Options:

A.

The arithmetic scale is preferred

B.

A linear scale is preferred

C.

A logarithmic scale is preferred

D.

A logarithmic or a linear scale is preferred

Question 18

Staying the course in a trading strategy GENERALLY entails?

Options:

A.

Meeting margin calls

B.

Not utilizing stops

C.

Not getting sidetracked by single, counter-trend news events

D.

Most valid buy signals in trading systems occur in the opposite direction of the prevailing trend

Question 19

ALL of the following are standard patterns used with 3-Box reversal point and figure charts, EXCEPT:

Options:

A.

Bullish or Bearish Triangle

B.

Triple Top or Triple Bottom

C.

Double Top or Double Bottom

D.

Bullish or Bearish Fulcrum

Question 20

Abandoned baby patterns:

Options:

A.

appear upon completion of star patterns

B.

appear nowhere in star patterns, only in box ranges

C.

ideally has a doji as second real bottom

D.

can only be formed over long periods of time

Question 21

What percentage of return should be earned if you have $100 in the capital and sustain a 20% loss to return to the break-even level of $100?

Options:

A.

Return 30 percent to the $80 to return to the $100 break-even level

B.

Return 25 percent to the $70 to return to the $100 break-even level

C.

Return 30 percent to the $70 to return to the $100 break-even level

D.

Return 25 percent to the $80 to return to the $100 break-even level

Question 22

In 3-box point and figure charts,

Options:

A.

A double-bottom and double top can be continuation patterns

B.

Only a double-bottom can be a continuation pattern

C.

Only a double-top can be a continuation pattern

D.

Neither can be continuation patterns. They do not exist in Point and Figur

Question 23

Tick volume refers to:

Options:

A.

the number of contracts traded at each price tick.

B.

the number of contracts traded at each time interval.

C.

the change in open interest during a particular time interval.

D.

the number of recorded price changes during a particular time interval.

Question 24

Which of the following the correct description of the law of percentages in the field of decision making and selection?

Options:

A.

A relative loss of 20% can be made back with a relative gain of 20%, but an absolute 20% loss requires a 25% gain to break even

B.

A relative loss of 20% can be made back with a relative gain of 20%, but an absolute 20% loss don't require a 25% gain to break even

C.

A relative loss of 20% can be made back with a relative gain of 20%, but an absolute 10% loss requires a 25% gain to break even

D.

A relative gain of 20% can be made back with a relative loss of 20%, but an absolute 20% loss requires a 25% gain to break even

Question 25

The bias under which, when an event has not occurred recently, the event is perceived as having zero or negligible probability of occurring in future, is categorized as:

Options:

A.

Saliency bias

B.

Framing bias

C.

Sunk-cost bias

D.

Anchoring bias

Question 26

In trend-based trading systems, what is the major determinant of trading activity (i.e., how often buy or sell signals are generated)?

Options:

A.

Smoothing technique used

B.

Distance between bands

C.

Selection of trend speed

D.

Use of a scaling factor

Question 27

Which is the CORRECT interpretation of the candlestick hanging man pattern?

Options:

A.

A hanging man always has a black real body

B.

A hanging man comes after a market rally

C.

A hanging man has no lower shadow

D.

A hanging man need not be confirmed by other indicators

Question 28

Which of the following pieces of information is NOT contained in the CFTC's Commitment of Traders report?

Options:

A.

Positions of hedgers and speculators

B.

Historical open interest of each contract

C.

Current open interest of each contract

D.

Reportable and non-reportable positions

Question 29

Which of the following is one of the disadvantages of computerized trading systems?

Options:

A.

Trading decisions are less consistent

B.

Most computerized systems are unprofitable in non-trending markets

C.

Profit trades are exited too early

D.

Computerized systems miss many market trends

Question 30

Which of the following is a CORRECT guideline in pyramiding trades positions?

Options:

A.

Each successive layer should be larger than the prior layer

B.

Take profits on winning positions

C.

Add to losing positions, as a form of dollar cost averaging

D.

Adjust protective stops to the breakeven point

Question 31

What of the following could be utilized in a computerized trading system to improve the performance of Wilder's Parabolic System?

Options:

A.

Trend lines

B.

Stops

C.

Directional movement index

D.

Average divergence index

Question 32

Which is the CORRECT interpretation of the candlestick umbrella pattern?

Options:

A.

They can be bullish or bearish depending on the market

B.

They are bearish after a rally

C.

They are called hammers after a downtrend

D.

All of the above

Question 33

What is the specific name given to the normal distribution for having special characteristics?

Options:

A.

Center limit theorem

B.

Histogram

C.

Central limit theorem

D.

All of the above statements

Question 34

__________ is used to calculate the relative volatility of the current portfolio compared to the benchmark by calculating the annualized return less the risk-free return and then divided by beta.

Options:

A.

Sharpe ratio

B.

Calmar ratio

C.

Sortino ratio

D.

Treynor ratio

Question 35

Using the Point-and-Figure method what is the standard method used to portray the volume on the chart?

Options:

A.

This is to multiply the volume occurring when each box was in operation

B.

This is to sum up the volume occurring when each box was in operation

C.

This is to divide up the volume occurring by each box was in operation

D.

It is, to sum up, the volume that occurs when every box is not in use

Question 36

Which of the following BEST describes equity market performance during the presidential election cycle:

Options:

A.

Market has its strongest year during first year of president's term, posts its worst returns during the pre-election year and slightly negative returns in election years

B.

Market has an above average year during first year of president's term, posts negative returns during the pre-election year and its strongest returns in election years

C.

Market has a below average year during first year of president's term, posts its strongest returns during the pre-election year or in the election year

D.

Market has a below average year during first year of president's term, posts its strongest returns in the second year and reasonably strong returns during the pre-election and election years

Question 37

To calculate moving averages for a point-and-figure chart:

Options:

A.

First, make a decision as to how many columns to average.

B.

First, re-draw the chart as a 1X1 chart,

C.

First, find the longest column, and count the number of filled boxes.

D.

First, convert the chart to a conventional line chart.

Question 38

Which of the following is considered a reversal pattern in candlestick charting?

Options:

A.

Windows

B.

Rising three methods

C.

Hanging man

D.

Falling three methods

Question 39

Which of the following is the best combination which results in respect to the volume and pullback in Diamond Top pattern?

Options:

A.

The best combination is when there is an upward breakout on less than normal breakout volume with no pullback

B.

The best mix is when there is a downward breakout on less than normal breakout rate and with few pullbacks

C.

The best combination is when a downward breakout happens on an under-average amount of breakout with no pullback

D.

The best combination is when there is a downward breakout at an above-average breakout rate with few pullbacks

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Total 262 questions