On November 22, the stock price of Coca Cola was $69.50, and the retailer stock index was 600.30. On November 25, the stock price of Coca Cola was $70.25, and the retailer stock index was 605.20. Consider the ratio of Coca Cola to the retailer index on November 22 and November 25. Coca Cola is _ the retail industry, and technical analysts who follow relative strength would advise _ the stock.

A) outperforming; buying
B) outperforming; selling
C) underperforming; buying
D) underperforming; selling
E) equally performing; neither buying nor selling

Question

On November 22, the stock price of Coca Cola was $69.50, and the retailer stock index was 600.30. On November 25, the stock price of Coca Cola was $70.25, and the retailer stock index was 605.20. Consider the ratio of Coca Cola to the retailer index on November 22 and November 25. Coca Cola is _______ the retail industry, and technical analysts who follow relative strength would advise _______ the stock.

A) outperforming; buying
B) outperforming; selling
C) underperforming; buying
D) underperforming; selling
E) equally performing; neither buying nor selling

Braden Staack · Accepted Answer

Final Answer : A, Explanation :   Explanation: To determine if Coca Cola is outperforming or underperforming the retail industry, we calculate the ratio of Coca Cola's stock price to the retailer index for both dates. On November 22, the ratio is   69.50 600.30  \frac{69.50}{600.30}  600.30 69.50 ​  , and on November 25, the ratio is   70.25 605.20  \frac{70.25}{605.20}  605.20 70.25 ​  . The increase in this ratio indicates that Coca Cola's stock price increased more, in relative terms, than the retailer index, suggesting that Coca Cola is outperforming the retail industry. Technical analysts who follow relative strength would see this as a positive sign and would likely advise buying the stock.

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