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

Over a 14-day period, the total of upward price changes on closing prices was Rs 42 and the total of downward price changes (absolute) was Rs 28. Using simple averages over 14 days, the relative strength (RS) and RSI are:

Average gain is 42/14 = 3 and average loss is 28/14 = 2, so relative strength is 1.50. RSI equals 100 minus 100 divided by (1 + RS), which is 100 - 40 = 60, indicating moderately positive momentum without being overbought.

  1. ARS = 0.67; RSI = 40
  2. BRS = 1.50; RSI = 60Correct
  3. CRS = 1.50; RSI = 150
  4. DRS = 1.50; RSI = 40

Explanation

Average gain = 42/14 = 3; average loss = 28/14 = 2. RS = 3/2 = 1.50. RSI = 100 - 100/(1+1.5) = 100 - 40 = 60. RS = 0.67 inverts the ratio, giving RSI of 40.

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