CFA Level 1: Price Range for Substantial Increase in Stock Supply

Price Range for Substantial Increase in Stock Supply

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Question

The price range at which a technician would expect a substantial increase in the supply of a stock is

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Explanations

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A. B. C. D.

D

Incentive price is not a real term. Technicians believe that after a stock has fallen from some previous higher price level, investors who bought at that higher level will wait for the price to come back up again to unload the stock at their break-even level. When the stock does reach that price range, selling by those investors will cause a substantial increase in supply.