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FOUNDATIONS of Stocks & Options

Home Study Guide: Class 1


1. The only way to survive tough economic conditions and create great wealth is: a) A lot of luck b) There is no waywere doomed c) Proper education d) Buy, hold, and hope for the best 2. True or False. Knowledge is the key to making your own investment decisions, making money in both good and bad economies, creating monthly prots, and sleeping well at night, knowing you just red your nancial advisor. 3. True or False. I can bring a friend or family member to learn with me how to trade the stock market. 4. True or False. The material covered in Foundations of Stocks & Options is really hard and only really smart nancial people can benet. 5. My class meets : Days of the week: ______________ and ______________ Time: _____________ 6. To really make money over time, the best strategy is to: a. Buy stock and hold it for 25 years. b. Dollar cost average. c. Buy baseball cards and run from the stock market. d. Learn to time the market through technical trading. 7. True or False. Mutual funds are managed by a fund manager and always make money no matter what the market is doing. 8. As an active trader I can: a. Have fun. b. Make monthly prots. c. Make money in both up and down markets. d. All of the above. 9. The TradeSmart University system teaches me: a. Through a step-by-step system. b. To convert my knowledge into skills through homework. c. To learn to trade through virtual trading rst so I dont risk real money while Im learning. d. To practice for the real deal like a soldier prepares for battle. e. All of the above.

10. The best chance of being successful in the market is to have: a. The ability to read the market and determine the direction of the stock. b. A masters degree in nancial analysis. c. $400,000 available to invest. d. A spouse, two kids, and a dog. 11. For the technical analyst, the price chart: a. Plots the past performance of a stock. b. Allows you to analyze a stocks history. c. Helps predict the future price performance of a stock. d. Is the starting point of all analysis. e. All of the above. 12. The four key prices that are reected in a price chart are: 1) ___________ 2) ___________ 3) ___________ 4) ___________ 13. A line chart plots the closing price of each day and draws a line to connect the price points. Construct a line chart using the following information:

$65

$60

$55

$50

6/1

6/2

6/3

6/4

6/5

6/6

$45

Closing Prices: 6/1 = $56 6/2 = $58 6/3 = $64 6/4 = $59 6/5 = $64 6/6 = $56

14. Construct a bar chart with the following information: Day 1 Opening Price High Price Low Price Closing Price = $52 = $58 = $49 = $56 Day 2 Opening Price High Price Low Price Closing Price = $56 = $58 = $48 = $48 Day 3 Opening Price High Price Low Price Closing Price = $48 = $59 = $46 = $55

$65

$60

$55

$50

$45 15. Using the same information above, construct a candlestick chart. $65

$60

$55

$50

$45

Answers: 1. 2. 3. 4. C True True False - The material covered is manageable by both experienced and inexperienced investors. 5. Your class times 6. D 7. False - Yes, they are managed by a fund manager, but they do not always go up. 8. D 9. E 10. A 11. E 12. In any order: 1) Opening Price 2) High Price 3) Low Price 4) Closing Price 13. $65

$60

$55

$50

6/1

6/2

6/3

6/4

6/5

6/6

$45

14.

$65

$60

$55

$50

$45 15. $65

$60

$55

$50

$45

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