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Chapter 02 Asset Classes and Financial Instruments




Question;31.;In calculating the;Standard and Poor's stock price indices, the adjustment for stock split;occurs;A.;by adjusting;the divisor.;B.;automatically.;C.;by adjusting;the numerator.;D.;quarterly, on;the last trading day of each quarter.;32.;Which of the;following statements regarding the Dow Jones Industrial Average (DJIA) is false?;A.;The DJIA is;not very representative of the market as a whole.;B.;The DJIA;consists of 30 blue chip stocks.;C.;The DJIA is;affected equally by changes in low- and high-priced stocks.;D.;The DJIA;divisor needs to be adjusted for stock splits.;E.;The value of;the DJIA is much higher than individual stock prices.;33.;The index that;includes the largest number of actively traded stocks is;A.;the NASDAQ;Composite Index.;B.;the NYSE;Composite Index.;C.;the Wilshire;5000 Index.;D.;the Value;Line Composite Index.;E.;the Russell;Index.;34.;A 5.5% 20-year;municipal bond is currently priced to yield 7.2%. For a taxpayer in the 33%;marginal tax bracket, this bond would offer an equivalent taxable yield;of;A.;8.20%.;B.;10.75%.;C.;11.40%.;D.;4.82%.;35.;If the market prices;of each of the 30 stocks in the Dow Jones Industrial Average (DJIA) all;change by the same percentage amount during a given day, which stock will;have the greatest impact on the DJIA?;A.;The stock;trading at the highest dollar price per share;B.;The stock;having the greatest amount of debt in its capital structure;C.;The stock having;the greatest amount of equity in its capital structure;D.;The stock;having the lowest volatility;36.;The stocks on the;Dow Jones Industrial Average;A.;have remained;unchanged since the creation of the index.;B.;include most;of the stocks traded on the NYSE.;C.;are changed;occasionally as circumstances dictate.;D.;consist of;stocks on which the investor cannot lose money.;E.;include most;of the stocks traded on the NYSE and are changed occasionally as;circumstances dictate.


Paper#55075 | Written in 18-Jul-2015

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