On November 22, the stock price of WalMart was $69.50, and the retailer stock index was 600.30.On November 25, the stock price of WalMart was $70.25, and the retailer stock index was 605.20.Consider the ratio of WalMart to the retailer index on November 22 and November 25.WalMart 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

Question

Quizplus · Accepted Answer

To calculate the ratio of WalMart to the retailer index, we need to divide WalMart's stock price by the retailer stock index.

On November 22: 
Ratio = 69.50/600.30 = 0.116

On November 25: 
Ratio = 70.25/605.20 = 0.116

We can see that the ratio remains the same on both days. This indicates that WalMart is performing in line with the retail industry. However, since WalMart's stock price has increased while the retail industry index has only marginally increased, we can say that WalMart is slightly outperforming the industry.

Therefore, the answer is A) outperforming; buying. Technical analysts who follow relative strength would advise buying the stock as it is showing signs of outperformance.

On November 22, the Stock Price of WalMart Was $69