CMA Final · Strategic Financial Management · Fundamental Analysis and Technical Analysis
Shares of Kaveri Textiles closed at Rs 100, Rs 102, Rs 104, Rs 106 and Rs 108 on five consecutive days (oldest to latest). What is the 5-day simple moving average at the latest day?
The 5-day simple moving average is Rs 104, found by adding the five closing prices, which total Rs 520, and dividing by five. Using only the latest three prices would wrongly give Rs 106, and the last close of Rs 108 is not an average.
- ARs 104Correct
- BRs 106
- CRs 102
- DRs 108
Explanation
Simple moving average = (100+102+104+106+108)/5 = 520/5 = Rs 104. Rs 106 would result from using only the last three prices (104+106+108)/3, which is a 3-day average, not 5-day. Rs 108 is merely the latest price.
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