Homework Help: investments

Posted by lia82 on Wednesday, July 11, 2007 at 9:26pm.

Assume the following daily closing for the Dow Jones Industrial Average:

Day DJIA Day DJIA
1 12,010 7 12,220
2 12,100 8 12,130
3 12,165 9 12,250
4 12,080 10 12,315
5 12,070 11 12,240
6 12,150 12 12,310

a. calculate a four-day moving average for Days 4 through 12.
b. Assume that the index on day 13 closes at 12,300. would this signal a buy or sell decision?

Please show me the calculation steps.Thanks

This site has a good explanation of the steps needed to calculate the moving average.

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_averages

Since 12,300 is above the moving average, you could sell to lock in a profit.

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