CMA Final · Strategic Financial Management · Fundamental Analysis and Technical Analysis
A 5-day simple moving average of the closing price of Tata Motors shares is being tracked. The closing prices (in rupees) on five consecutive days were 640, 652, 648, 660 and 650. On the sixth day the share closed at Rs 662. What is the 5-day simple moving average on the sixth day?
The 5-day simple moving average on day six is Rs 654.40. The window now covers days two to six, so the first price of 640 is dropped and 662 added, giving a total of 3272, which divided by five equals 654.40.
- ARs 654.40Correct
- BRs 650.00
- CRs 658.00
- DRs 652.00
Explanation
On day six the window drops day 1 (640) and adds 662. The sum of days 2 to 6 is 652+648+660+650+662 = 3272, and 3272/5 = 654.40. Rs 650 is the average of the original window (3250/5), which was not updated for the new day.
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