Question : 30. Which of the following statements seems most appropriate when the : 1284280

 

 

30. Which of the following statements seems most appropriate when the Dow Jones Industrial Average increases by 2%? 
A. All stocks on the exchange increased by 2%.
B. Only the 30 DJIA stocks increased by 2%.
C. A broad-based market indicator was up by 2%.
D. The S&P 500 index increased by 2%.

31. Stock A has 10 million shares issued and stock B has 5 million shares issued. What is their relative weighting if both stocks are represented in the S&P 500? 
A. They have equal weighting, like all S&P 500 stocks.
B. B has twice the weighting, to account for having fewer shares.
C. A has twice the weighting, to account for having more shares.
D. They are weighted according to their expected performance.

32. In addition to the number of stocks represented, a difference between the S&P 500 and the Dow is that the S&P 500: 
A. dates back to the nineteenth century while the Dow is a recent innovation.
B. is value-weighted while the Dow is an equally-weighted index.
C. includes foreign stocks while the Dow is domestic.
D. index includes dividends in its return while the Dow does not.

33. Although Standard and Poor’s Composite Index contains a small number of U.S. publicly traded stocks, the Index represents: 
A. all stocks that prefer to be equally weighted.
B. all stocks that prefer to be value-weighted.
C. approximately 50% of U.S. stocks traded, in value.
D. approximately 75% of U.S. stocks traded, in value.

34. Market interest rates have risen substantially in the 5 years since an investor purchased Treasury bonds that were offering a 7% return. If the investor sells now he or she is likely to receive: 
A. greater than a 7% total return.
B. less than a 7% total return.
C. a 7% total rate of return.
D. a 7% nominal return but less than a 7% real return.

35. Which of the following guarantees is offered to common stock investors? 
A. Guaranteed to receive dividends
B. Guaranteed to receive capital gains
C. Guaranteed only to receive a refund of principal
D. No guarantees of any form

36. The variance of an investment’s returns is a measure of the: 
A. volatility of the rates of return.
B. probability of a negative return.
C. historic return over long periods.
D. average value of the investment.

37. In a year in which common stocks offered an average return of 18%, Treasury bonds offered 10% and Treasury bills offered 7%, the risk premium for common stocks was: 
A. 1%.
B. 3%.
C. 8%.
D. 11%.

38. Which of the following statements is correct for an investor starting with $1,000 in common stocks over a 20-year investment horizon in which stocks averaged 11% in nominal terms and 4% in real terms? The portfolio value is now approximately: 
A. $1,800 in real terms.
B. $3,679 in real terms.
C. $3,870 in nominal terms.
D. $8,062 in nominal terms.

39. From a historical perspective (1900-2007), what would you expect to be the approximate return on a diversified portfolio of common stocks in a year that Treasury bills offered 7.5%? 
A. 8.3%
B. 12.3%
C. 14.9%
D. 19.3%

 

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