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FIN5004 CA1 – Individual Assignment

DIPLOMA IN BANKING & FINANCE

FIN5004 FINANCIAL TRADING

CONTINUOUS ASSESSMENT ONE

Individual Assignment

This Continual Assessment will contribute 30% towards your Term grade.

The paper consists of 4 questions and a chart on 4 pages.

Answer ALL questions and show ALL workings

Instructions

1. Include your Full Name and Student ID number on the cover page.

2. Type your assignment in an MS Word document using Times New Roman, font size 12. Save your file as <StudentID_Full_Name> and submit it to the dropbox in Canvas. Please open the submitted file in Canvas to ensure correct file is submitted.

3. Students may use software, e.g. PowerPoint, to sketch and paste it on the answer template.

4. In addition to the softcopy, on campus students shall also submit a hardcopy to the lecturer.

5. Submission deadline: 26 Jan 2023, 11:59 am.

6. Late submission (within 24 hrs) will be subjected to a 20% mark deduction.

7. Late submissions beyond 24 hrs will NOT be graded.

8. CA1 is an individual assignment and should be worked upon independently. Any form of plagiarism and/or collusion will be penalised.

Important Notes:

Students caught for Plagiarism and/or Collusion will be subjected to heavy penalties.

Plagiarism & Collusion (extracted from the Student Handbook)

3.7.2 Plagiarism/Collusion

Plagiarism is the theft of intellectual property. It is a form of lying, stealing and mistreating others.

Students are reminded that plagiarism is a serious offence subject to the Institute’s disciplinary procedures.

Plagiarism can mean any one of the followings:

• direct copying of phrases and/or passages without a reference and/or quotation marks;

• paraphrasing another writer’s work in your written work without citing the reference;

• making a direct reference to an author you have not read although you may have read about him. The correct way is to reference the secondary source you have actually read rather than referencing the original which you have not read;

• copying the work of another student, in part or in whole;

• handing in an assignment that has already been submitted for assessment in the same or any other course.

Please note that it is also a disciplinary offence for students to allow their work to be plagiarised by another student.

A student found guilty of any of the above offences will render the student liable for disciplinary actions, which may result in the voiding and adjustments to the continuous assessment grade and may result in expulsion from the Institute.

Question 1 (10 marks)

Dow Theory

Major Trends have three Phases - The Accumulation phase, Second phase and Distribution phase.

(a) Elaborate on the THREE (3) phases. (6 marks)

(b) With the help of a clearly labelled diagram, indicate the entry & exit points of the THREE (3) types of investors in the three phases elaborated in part (a). (4 marks)

Question 2 (10 marks)

Chart Pattern

(a) With the help of a clearly labelled price and volume diagram, describe a Bearish Flag. You may sketch the diagram by hand or on PowerPoint and then attach it to the answer template. [Do NOT attach lecture slides.] (5 marks)

(b) List FIVE (5) characteristics of this pattern. (5 marks)

Question 3 (20 marks)

Refer to Chart 3 for this question. (Online students: Plot on PowerPoint slide, indicate all answers on it and paste it on the answer template and submit into the dropbox. On campus students: Plot on hardcopy and submit as part of hardcopy report. Scan and paste the chart onto the Word document and submit into the dropbox.)

(a) With the help of suitable lines and annotations, indicate the trends for the following periods:

i. Between Jun to Jul 2022.

ii. Between 19 Sep to 31 Oct 2022. (4 marks)

(b) From the beginning of the chart to 13 Jun 2022. Using suitable lines, arrows and annotations, indicate the pattern found. (2 marks)

(c) Refer to the ellipse marked A on the chart. Using suitable lines, arrows and annotations, indicate the pattern found. Indicate the price objective ($) of this pattern when it is fully formed. (4 marks)

(d) Refer to the gaps marked B, C and D. List these gaps and provide ONE (1) characteristic of each gap. (6 marks)

(e) Refer to the trend from 14 Nov 2022 to the end of the chart marked Trend E. What trend is emerging. Provide reasons of your belief and provide the price levels for the trend to go up or down. Mark these levels on the chart. (4 marks)

Question 4 (10 marks)

Moving Averages

(a) Calculate:

(i) 5-day Simple Moving Average (SMA) (3 marks)

(ii) 5-day Weighted Moving Average (WMA) (3 marks)

(iii) 5-day Exponential Moving Average (EMA) (2 marks)

Aug        Price             5SMA            5WMA             5EMA

16        13,102.55

17        12,938.12

18        12,965.34

19        12,705.22

22        12,381.57

23        12,381.30

24        12,431.53

Note: Give answers in the above table to the nearest whole number. Show all working and steps in the answer booklet.

(b) On an uptrend, list the nearest to the furthest moving average lines relative to price, i.e. Simple, Weighted and Exponential moving averages. Why is the Exponential moving average preferred over the SMA and WMA? (2 marks)