CS Executive · Corporate Accounting and Financial Management · Security Analysis
Which belief is central to technical analysis?
Technical analysis rests on the belief that prices move in trends and that historical price patterns tend to repeat. Analysts therefore study charts and volume to predict future movements. It does not assume price equals book value or depend solely on dividends.
- APrice movements tend to follow trends and history tends to repeat itselfCorrect
- BMarket price always equals the book value of a share
- COnly dividend declarations affect share prices
- DShare prices are unrelated to supply and demand
Explanation
Technical analysis assumes that prices reflect all information, move in trends and that patterns repeat. Book value equality and dividend-only pricing are not its premises, and it relies on supply and demand, so the other options are wrong.
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