Skip to content

CMA Final · Strategic Financial Management · Fundamental Analysis and Technical Analysis

A stock closes at Rs 120 on day 10. Its closing price 10 days earlier was Rs 100. Using the simple price rate of change (ROC) indicator, defined as (current close ÷ close n days ago) × 100 with n = 10, what is the ROC value?

The ROC under the ratio definition is 120, obtained by dividing the current close of Rs 120 by the close of Rs 100 ten days ago and multiplying by 100. A value above 100 signals positive momentum. The figure 20 would be the percentage change version.

  1. A20
  2. B120Correct
  3. C83.33
  4. D1.20

Explanation

ROC = (120 ÷ 100) × 100 = 120. A reading above 100 indicates upward momentum. The value 20 is wrong because it is the percentage change, which is the version of ROC that subtracts 100; the ratio form asked here does not. The value 83.33 inverts the ratio.

Did you get it right without looking?

One question tells you little. A timed set on Fundamental Analysis and Technical Analysis shows your real accuracy, how long you take and where you lose marks.

Practise Fundamental Analysis and Technical AnalysisFree diagnostic mock

More Fundamental Analysis and Technical Analysis questions