The Dow Theory

question 58

Multiple Choice

The Dow Theory

• A) is used to predict long- term trends in the market based on confirming actions by the transportation average.
• B) concentrates on the secondary trends in both the industrial and the transportation averages.
• C) states that the market's performance can be described by long- term price trends.
• D) contends that the long- term trend of the market remains constant until the industrial average confirms a shift in direction as first seen in the transportation average.

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Definitions:

Next Month's Performance

Predictive financial or operational metric projections that estimate a company's activities or financial status for the upcoming month.

Accrual Basis

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Accounting Records

The documentation of all the financial transactions and positions of a business, kept for the purpose of financial reporting and auditing.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid out.