NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
A stock closes at Rs 120 on day 1 and day 2 closes at Rs 130. Using a 3-day simple moving average, closes on days 3, 4 and 5 are Rs 125, Rs 140 and Rs 135. What is the 3-day SMA on day 5?
The 3-day simple moving average on day 5 is Rs 133.33. It averages the latest three closes, days 3, 4 and 5, which are Rs 125, Rs 140 and Rs 135. Their sum is Rs 400, and dividing by three gives 133.33.
- ARs 133.33Correct
- BRs 130.00
- CRs 135.00
- DRs 126.67
Explanation
The 3-day SMA on day 5 uses days 3, 4 and 5: (125 + 140 + 135) / 3 = 400 / 3 = 133.33. Rs 130 would result from including the wrong days (days 2-4 give 131.67; averaging 125 and 135 gives 130). Rs 126.67 uses days 1-3 (120+130+125=375/3=125, not this), so it is wrong.
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