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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 106 and Rs 112. What is the 5-day simple moving average?

The 5-day simple moving average is Rs 106. Add the five closing prices, 100, 104, 108, 106 and 112, to get Rs 530, then divide by five. A simple moving average gives equal weight to every price in the window.

  1. ARs 106Correct
  2. BRs 108
  3. CRs 110
  4. DRs 104

Explanation

Sum = 100 + 104 + 108 + 106 + 112 = 530. Dividing by 5 gives Rs 106. Rs 108 is the median value and would be wrongly chosen by someone who picks the middle price, while Rs 104 would result from dropping the last price (sum 418 over 4 gives 104.5, roughly).

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