Canadian Securities Course (CSC) Level 2 Practice Exam

Which type of analysis relies on statistics and uses indicators to determine investor sentiment and expectations?

1. Cycle Analysis

2. Falling/rising trends

3. Quantitative Analysis

4. Chart/Technical Analysis

The correct answer is: Quantitative Analysis

The correct answer is quantitative analysis. This type of analysis employs statistical methods and mathematical models to interpret historical data and identify patterns. By focusing on numerical data, quantitative analysis helps investors gauge market trends and investor sentiment, often through various indicators such as price movement, trading volume, and volatility. This approach allows analysts to make informed predictions about future market movements based on empirical data. In contrast, cycle analysis examines recurring patterns in market movements but does not primarily rely on numerical data or indicators. Falling/rising trends focus more on price direction rather than a statistical evaluation of broader market sentiment. Chart or technical analysis uses historical price charts to find patterns and trends but may not incorporate a rigorous statistical approach as seen in quantitative analysis. Hence, while all options relate to market analysis, quantitative analysis specifically aligns with the use of statistics and indicators for understanding investor sentiment and expectations.