CMA Final · Strategic Financial Management · Fundamental Analysis and Technical Analysis
A 9-day exponential moving average (EMA) of a share price was ₹200 yesterday. Today's closing price is ₹212. Using the standard smoothing factor 2/(n+1), what is today's EMA?
Today's EMA is ₹202.40. The smoothing factor for a 9-day EMA is 2/10 = 0.2. Adding 20% of the gap between today's price and yesterday's EMA, which is 0.2 x 12 = 2.40, to ₹200 gives ₹202.40.
- A₹202.40Correct
- B₹202.67
- C₹201.20
- D₹206.00
Explanation
Smoothing factor = 2/(9+1) = 0.20. EMA = 200 + 0.20 x (212 - 200) = 202.40. Using 2/9 gives 202.67, which is the wrong factor.
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