NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
A stock's closing prices over the last five days are Rs 100, Rs 104, Rs 108, Rs 112 and Rs 116. What is the 5-day simple moving average of the closing price?
The 5-day simple moving average is Rs 108. The five closing prices add up to Rs 540, and dividing by five gives Rs 108. A simple moving average gives equal weight to each day in the window.
- ARs 108Correct
- BRs 104
- CRs 112
- DRs 116
Explanation
Sum = 100+104+108+112+116 = 540. Dividing by 5 gives Rs 108. Rs 116 is merely the latest close, and Rs 112 would result from ignoring the first day and averaging the last four days (112 is the mean of 108,112,116 plus...) which is not the 5-day SMA.
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