CMT Exam Level 2 Free Practice Questions & Answers Set 2
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Question 1 of 30
1. Question
When studying the patterns of standard triangles what is the name given to the pattern that is formed when the lower trend is rising and the upper bound is a horizontal resistance zone?
Correct
When the lower trend line is rising, and the upper bound is a region of horizontal resistance, it is called a triangle ascending. When the upper limit decreases and the lower bound increases, it is called a symmetrical triangle. When both the upper and lower bound slant and converge in the same direction, this is called a wedge.
Incorrect
When the lower trend line is rising, and the upper bound is a region of horizontal resistance, it is called a triangle ascending. When the upper limit decreases and the lower bound increases, it is called a symmetrical triangle. When both the upper and lower bound slant and converge in the same direction, this is called a wedge.
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Question 2 of 30
2. Question
When both the bounds upper and lower bound in the pattern analysis of standard triangles are formed in the same direction and are converging toward each other, what is the name of the pattern being formed?
Correct
When both the upper and lower bound slant and converge in the same direction, it is called a wedge, and when the two lines diverge irrespective of the slope, a reverse triangle, it is called an expanding pattern. We get what is called a diamond pattern when we combine an expanding pattern with a triangle, normally a symmetrical triangle.
Incorrect
When both the upper and lower bound slant and converge in the same direction, it is called a wedge, and when the two lines diverge irrespective of the slope, a reverse triangle, it is called an expanding pattern. We get what is called a diamond pattern when we combine an expanding pattern with a triangle, normally a symmetrical triangle.
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Question 3 of 30
3. Question
What is the new pattern formed when we add a triangle in a broadening pattern using the concepts learned in pattern analysis select the best possible choice.
Correct
If the two lines diverge irrespective of the slope, the reverse triangle is called the extending pattern. When we combine an expanding pattern with a triangle, typically a symmetrical triangle, we get what’s called a pattern of diamonds.
Incorrect
If the two lines diverge irrespective of the slope, the reverse triangle is called the extending pattern. When we combine an expanding pattern with a triangle, typically a symmetrical triangle, we get what’s called a pattern of diamonds.
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Question 4 of 30
4. Question
When you enter on a breakout from a descending triangle, what is the effect of an upward breakout?
Correct
Upward breakouts on discrepancies add to results considerably and are certainly something to watch for. Gaps tend to have no impact at breaks downwards.
Incorrect
Upward breakouts on discrepancies add to results considerably and are certainly something to watch for. Gaps tend to have no impact at breaks downwards.
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Question 5 of 30
5. Question
Which of the following outcome is ignored or has a negative impact when a pullback or a throwback takes place in the case of the Symmetrical triangle?
Correct
It does not mean that a pullback or throwback should be ignored, but rather performance standards should be lower than if there had been no pullback or throwback. Gap breakouts do not tend to impact results on the upside, but on the downside do offer a few extra percentage points.
Incorrect
It does not mean that a pullback or throwback should be ignored, but rather performance standards should be lower than if there had been no pullback or throwback. Gap breakouts do not tend to impact results on the upside, but on the downside do offer a few extra percentage points.
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Question 6 of 30
6. Question
In trading triangles what is the correct formulation for calculating the initial target for the patterns formed?
Correct
The initial target for these trends is determined by applying the base distance to the price where the breakout occurred — the vertical distance between the original upper and lower reverse point values.
Incorrect
The initial target for these trends is determined by applying the base distance to the price where the breakout occurred — the vertical distance between the original upper and lower reverse point values.
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Question 7 of 30
7. Question
Which of the following statements leads to the formation of the positive divergence? Select the best possible answer.
Correct
The positive deviation occurs when the price hits a new low unconfirmed by a new low in the oscillator at a sequence of price highs. Numerous divergences will occur in a very strong pattern and, of course, if the oscillator is bounded, it will occur more frequently as there is no space for the oscillator to keep producing new highs or lowers.
Incorrect
The positive deviation occurs when the price hits a new low unconfirmed by a new low in the oscillator at a sequence of price highs. Numerous divergences will occur in a very strong pattern and, of course, if the oscillator is bounded, it will occur more frequently as there is no space for the oscillator to keep producing new highs or lowers.
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Question 8 of 30
8. Question
From the following statement, which is the factor that leads to the difference between the Reversals and the Divergence?
Correct
As with divergences, technicians have used reversals since the first use of oscillators, but Andrew Cardwell recently popularized them. A reversal varies from a difference in that price instead of the oscillator, leads the transition.
Incorrect
As with divergences, technicians have used reversals since the first use of oscillators, but Andrew Cardwell recently popularized them. A reversal varies from a difference in that price instead of the oscillator, leads the transition.
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Question 9 of 30
9. Question
Which of the following formation leads to the formation of a negative reversal when standing about Confirmations?
Correct
A negative reversal happens when the oscillator hits a new high above that of day 4 on day 20 but the price does not. Positive reversal is the same as negative at low bars only.
Incorrect
A negative reversal happens when the oscillator hits a new high above that of day 4 on day 20 but the price does not. Positive reversal is the same as negative at low bars only.
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Question 10 of 30
10. Question
Which of the following leads to the formation of a Crossover, using the concepts learned in the Confirmation?
Correct
Crossovers arise when the oscillator reaches either a certain point or a separate oscillator. One amount that is always significant is the mean value, usually either zero or one that bisects the range of the travels of the oscillator.
Incorrect
Crossovers arise when the oscillator reaches either a certain point or a separate oscillator. One amount that is always significant is the mean value, usually either zero or one that bisects the range of the travels of the oscillator.
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Question 11 of 30
11. Question
Which of the following are considered investments that are concerned with hard asset analysis with regards to selection and decision making?
Correct
Hard assets say analyzes would focus on those investments concerned about the price of hard assets. These may be investments in futures or spot markets strong assets themselves, but the category also includes coal, oil, or forest stock Companies that produce products.
Incorrect
Hard assets say analyzes would focus on those investments concerned about the price of hard assets. These may be investments in futures or spot markets strong assets themselves, but the category also includes coal, oil, or forest stock Companies that produce products.
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Question 12 of 30
12. Question
On which of the following factors the emphasis should be placed when there is a rise in the soft assets?
Correct
When the tide turns in the opposite direction and soft assets seem more promising, the focus should be put on Commodity consumers, not manufacturers, consumer products, interest-rate issues, bonds, and the stocks, or currencies of the nations buying them.
Incorrect
When the tide turns in the opposite direction and soft assets seem more promising, the focus should be put on Commodity consumers, not manufacturers, consumer products, interest-rate issues, bonds, and the stocks, or currencies of the nations buying them.
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Question 13 of 30
13. Question
What is the average duration of a business cycle with regards to the Cyclical Emphasis?
Correct
A variety of market cycles lie within the longer secular economic pattern. Such business cycles are variable in length but typically about four to five years on average.
Incorrect
A variety of market cycles lie within the longer secular economic pattern. Such business cycles are variable in length but typically about four to five years on average.
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Question 14 of 30
14. Question
What is the relationship between the U.S. dollar and raw materials prices in the United States?
Correct
The dollar is significant in that it is the selling currency for many of the raw materials in the world such as oil, gold, and other precious metals. It makes those goods cheap in foreign currencies but costly in dollar terms when the dollar declines. Therefore, in the United States, there is a leading inverse relationship between the US dollar and the prices of raw materials.
Incorrect
The dollar is significant in that it is the selling currency for many of the raw materials in the world such as oil, gold, and other precious metals. It makes those goods cheap in foreign currencies but costly in dollar terms when the dollar declines. Therefore, in the United States, there is a leading inverse relationship between the US dollar and the prices of raw materials.
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Question 15 of 30
15. Question
In the selection and decision making what is the important caveat that should be taken into consideration when relative return is the point of focus?
Correct
One major caveat is that the signals come from the averages, not from the raw. Specific statistics are also to be used as backups. It is likely that all the markets will fall sometime in the future. The investor may find the “best” market in that case but still, lose money — maybe not as quickly as in other markets, but still lose. For this reason, one must never underestimate the absolute importance of the markets.
Incorrect
One major caveat is that the signals come from the averages, not from the raw. Specific statistics are also to be used as backups. It is likely that all the markets will fall sometime in the future. The investor may find the “best” market in that case but still, lose money — maybe not as quickly as in other markets, but still lose. For this reason, one must never underestimate the absolute importance of the markets.
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Question 16 of 30
16. Question
When taking system testing concepts in mind which of the following is a more general model of how a system should be designed?
Correct
Many designers of the systems claim that the simpler the system, the better. A device may get clogged with a large number of conditions and statistically lose degrees of freedom, requiring more data and more signals to determine its purpose.
Incorrect
Many designers of the systems claim that the simpler the system, the better. A device may get clogged with a large number of conditions and statistically lose degrees of freedom, requiring more data and more signals to determine its purpose.
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Question 17 of 30
17. Question
Which of the following factors should not be taken into consideration when testing your designed system and its performance?
Correct
Specificity is much easier to use and test compared with generality. You will need to consider the system ‘s reasoning, and make sure it fits your trading or investing style. Second, you’ll need to decide which markets to focus on.
Incorrect
Specificity is much easier to use and test compared with generality. You will need to consider the system ‘s reasoning, and make sure it fits your trading or investing style. Second, you’ll need to decide which markets to focus on.
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Question 18 of 30
18. Question
Which of the following problem that takes place when performing multiple regressions with regards to statistical analysis?
Correct
One problem that is often encountered when performing multiple regressions is what is called multicollinearity. This happens when the correlation is reasonably strong between two or more of the independent variables.
Incorrect
One problem that is often encountered when performing multiple regressions is what is called multicollinearity. This happens when the correlation is reasonably strong between two or more of the independent variables.
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Question 19 of 30
19. Question
Which of the following factors is not considered when using inferential statistics?
Correct
With inferential statistics, we attempt to use observed data to infer things about general characteristics of the observed data or additional observation characteristics. We often test whether a given hypothesis is true or wrong.
Incorrect
With inferential statistics, we attempt to use observed data to infer things about general characteristics of the observed data or additional observation characteristics. We often test whether a given hypothesis is true or wrong.
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Question 20 of 30
20. Question
On which factors does the Gaussian distribution is based upon with regards to the statistical analysis? Choose the best possible answer.
Correct
Of all probability distributions, the most well-known is the normal distribution, also known as the Gaussian distribution. Because of its bell shape, it’s also known as the bell curve. It takes only two parameters — the mean and standard deviation.
Incorrect
Of all probability distributions, the most well-known is the normal distribution, also known as the Gaussian distribution. Because of its bell shape, it’s also known as the bell curve. It takes only two parameters — the mean and standard deviation.
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Question 21 of 30
21. Question
If the market price of wheat at harvest time is not as high as the expected ones then which of the following outcome is expected to have occurred when taking about the future market?
Correct
At harvest time you are worried about the market price of wheat. If the price isn’t as high as you expected due to a bumper wheat harvest, your income will suffer.
Incorrect
At harvest time you are worried about the market price of wheat. If the price isn’t as high as you expected due to a bumper wheat harvest, your income will suffer.
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Question 22 of 30
22. Question
Which of the following is not true about the forward contract with the American Bread Company (ABC)?
Correct
In this forward contract, you will agree to sell a particular quantity of wheat to ABC at a specific future date and at a price that you now fixed. This reduces your risk and the risk of ABC, you know what to expect as far as your income and ABC locks in its input quality.
Incorrect
In this forward contract, you will agree to sell a particular quantity of wheat to ABC at a specific future date and at a price that you now fixed. This reduces your risk and the risk of ABC, you know what to expect as far as your income and ABC locks in its input quality.
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Question 23 of 30
23. Question
Which of the following is not a proper method to close nonfinancial contracts with regards to future trading?
Correct
Incorrect
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Question 24 of 30
24. Question
After buying a future contract which of the following obligations are not inflicted upon the trader?
Correct
If an investor then buys a futures contract, he holds little more but an obligation to take delivery of the product underlying the contract on the day of delivery. Since the contract is not a specific proprietary title, it is never executed until the day of delivery. It’s traded back and forth between buyers and sellers, close to how you play musical chairs, except the music stops on the day of delivery.
Incorrect
If an investor then buys a futures contract, he holds little more but an obligation to take delivery of the product underlying the contract on the day of delivery. Since the contract is not a specific proprietary title, it is never executed until the day of delivery. It’s traded back and forth between buyers and sellers, close to how you play musical chairs, except the music stops on the day of delivery.
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Question 25 of 30
25. Question
Which of the following is the reason which differentiates between a financial futures contract from a commodity futures contract?
Correct
Financial futures contracts differ from commodity futures contracts in that they settle on the day of delivery with cash based on the underlying securities or index closing prices.
Incorrect
Financial futures contracts differ from commodity futures contracts in that they settle on the day of delivery with cash based on the underlying securities or index closing prices.
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Question 26 of 30
26. Question
Which of the following is not an advantage of The elimination of the noise in a Box Size concerning the chart construction?
Correct
Eliminating the noise makes the map more convenient for traders or investors who are interested in more time and action. On the other hand, if a pattern appears to be forming in the longer-term map, the size of the box can be reduced to provide more information near the likely longer-term directional transition.
Incorrect
Eliminating the noise makes the map more convenient for traders or investors who are interested in more time and action. On the other hand, if a pattern appears to be forming in the longer-term map, the size of the box can be reduced to provide more information near the likely longer-term directional transition.
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Question 27 of 30
27. Question
When using Multibox Reversal which additional functionality can be achieved when using this method of chart construction?
Correct
In a point-and-figure map, the other component is the sum of the reversal. We could retain the one-point box scale but only report a reversal to the next column when the three boxes reversed the size. This also reduces the noise in price action and prolongs the duration during which price action is reported.
Incorrect
In a point-and-figure map, the other component is the sum of the reversal. We could retain the one-point box scale but only report a reversal to the next column when the three boxes reversed the size. This also reduces the noise in price action and prolongs the duration during which price action is reported.
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Question 28 of 30
28. Question
What is the name given to the area being formed where all previous significant troughs have not likely occurred at the same price
level?Correct
Owing to the unlikely occurrence of all previous significant troughs at the same price point, a region called a zone is created between the highest and lowest horizontal line. This specification describes the real region of assistance or resistance.
Incorrect
Owing to the unlikely occurrence of all previous significant troughs at the same price point, a region called a zone is created between the highest and lowest horizontal line. This specification describes the real region of assistance or resistance.
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Question 29 of 30
29. Question
Given the condition where a horizontal line is by itself with no other horizontal lines close to it, what is the name given to identify this scenario with regards to trend analysis?
Correct
When a horizontal line is by itself with no other adjacent horizontal lines, it is typically an individual level of support or resistance. Unless accompanied by extraordinary volume, such levels usually don’t have the same strength in the future as a combination of horizontal lines within a zone.
Incorrect
When a horizontal line is by itself with no other adjacent horizontal lines, it is typically an individual level of support or resistance. Unless accompanied by extraordinary volume, such levels usually don’t have the same strength in the future as a combination of horizontal lines within a zone.
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Question 30 of 30
30. Question
In the future, what is the name given to an event that takes place when prices will often enter the zone and will break out of the outer horizontal line of the zone keeping in mind the concepts learned during trend analysis?
Correct
Prices should continue to halt in these areas in the future, albeit sometimes at a single point. Prices often go into the zone but don’t break out of the zone ‘s outer horizontal line. If they break that level, we have what is referred to as a “breakout” which has significant consequences. A price break under the support zone means buyers are satiated at that point.
Incorrect
Prices should continue to halt in these areas in the future, albeit sometimes at a single point. Prices often go into the zone but don’t break out of the zone ‘s outer horizontal line. If they break that level, we have what is referred to as a “breakout” which has significant consequences. A price break under the support zone means buyers are satiated at that point.
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