Answered: Mark the followingstatement True or…

Mark the followingstatement True or False. 1.The Dow Jones Industrial Average Index is a price-weighted index. 2.S&P 500 indexisa market-value-weightedindex.

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter14: Investing In Stocks And Bonds

Section14.3: Use The Internet To Evaluate And Select Stocks

Problem 3CC

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Concept explainers

Stock Market Indices

Stock indexes are used to compare the price fluctuations of a group of stocks of similar companies, which are combined based on a similar industry or a particular market capitalization limit or type of market. The price comparison is based on a pre-determined standard method or indicators. These stock indexes are usually considered a base for comparison of a particular stock, and the performance of that particular company can be easily determined.

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Mark the followingstatement True or False.

1.The Dow Jones Industrial Average Index is a price-weighted index.

2.S&P 500 indexisa market-value-weightedindex.

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The Dow Jones Industrial Average is an example of: O an arithmetic-weighted index. a common-weighted index. O a value-weighted index. a price-weighted index. a geometric-weighted index.
Which index is price-weighted? O A. Dow Jones Industrial Average O B. S&P 500 O C. NASDAQ O D. None of the above
A price-weighted index such as the DJIA is a geometric mean of current stock prices. a. True b. False
2) Which of the following indices is (are) market-value weighted? 1. I) The New York Stock Exchange Composite Index 2.II) The Standard and Poor's 500 Stock Index 3.III) The Dow Jones Industrial Average A) I only B) I and II only C) I and III only D) I, II, and III E) II and III only Please provide an accurate answer with justification.
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Compare and contrast the following: A. Primary and secondary financial markets. B. Dow Jones Industrial Average and S&P 500 as stock market indexes
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What is the difference between stock price indexes that are simple averages of prices and those that are capitalization-weighted? Give examples of each.
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Given the following information on five stocks, construct: a. A simple price-weighted average b. A value-weighted average c. A geometric average d. What is the percentage increase in each average if the stock prices change to those in Column I? e. What is the percentage increase in each average if the stock prices change from those in the Price column to those in Column II? f. Why were the percentage changes different in parts (d) and (e)? g. If you were managing a fund and wanted a source to compare your results to, which of the three averages would you prefer to use, and why? Stock Price # of Shares I II A B C D E F $12.00 150,000 $14.00 125,000 $11.00 200,000 $ 22.00 80,000 $8.00 30,000 $29.00 140,000 $12.00 $12.00 $14.00 $14.00 $20.00 $11.00 $ 22,00 $ 22.00 $8.00 $15.00 $29.00 $29.00
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