NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
A stock has a 14-day average gain of 1.5 and an average loss of 0.5 over the period. Using the standard RSI formula, what is the RSI value?
The RSI is 75. Relative strength is average gain divided by average loss, 1.5/0.5 = 3, and RSI = 100 - 100/(1+3) = 75. This is in the overbought zone above 70.
- A75Correct
- B66.7
- C25
- D80
Explanation
RS = 1.5/0.5 = 3. RSI = 100 - 100/(1+3) = 100 - 25 = 75. Check: 3/(3+1) = 75%. Option 25 results from forgetting to subtract from 100.
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