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

A stock's closing prices over five days are Rs 100, Rs 104, Rs 102, Rs 108 and Rs 106. Using the simple moving average method, what is the 5-day simple moving average at the close of day 5?

The 5-day simple moving average is Rs 104. It is the sum of the five closing prices, Rs 520, divided by five. Using the latest price of Rs 106 or the highest price of Rs 108 instead would ignore the averaging process that defines a moving average.

  1. ARs 104
  2. BRs 105Correct
  3. CRs 106
  4. DRs 108

Explanation

Sum of prices = 100+104+102+108+106 = 520. Dividing by 5 gives Rs 104. Check: the option Rs 105 would need a sum of 525, so recompute: 100+104=204, +102=306, +108=414, +106=520. Thus the average is Rs 104.

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