Question 1

What is the importance of the P/E Ratio to investors?

Accepted Answer

The answer of What is the importance of the P/E...

Question 2

Because the DJIA weights stocks based on their relative prices,when a high priced stock moves a small amount on the DJIA,it has a(n)________ impact on the index.

Accepted Answer

The Dow Jones Industrial Average (DJIA) is a price-weighted index, meaning stocks with higher prices have a greater impact on the index's movement. Therefore, when a high-priced stock moves, even by a small amount, it can have an inordinately large impact on the overall index.

Question 3

Compare and contrast the Dow Jones Industrial Average and Standard & Poor's 500-Stock Index.

Accepted Answer

The answer of Compare and contrast the Dow Jones Industrial...

Question 4

All of the following are stock market indexes except

Accepted Answer

The Dow Jones Industrial Average, the Standard & Poor's 500, and the Wilshire 5000 are all stock market indexes, but the Russell 100 is not.

Question 5

You are looking at the stock quotes in your newspaper and you see that your stock closed up 5% yesterday.Where would you look to see how it has been doing over the last year?

Accepted Answer

The 52-week high and low will give you a range of the stock's performance over the past year, allowing you to see if the 5% increase is a significant change from its historical performance. The prior day's close will only give you information about the stock's performance on the previous day, and P/E ratio and market cap are not relevant to assessing a stock's historical performance.

Question 6

Earnings per share is a ratio that describes the amount of net income less preferred stock dividends available to the common shareholders.

Accepted Answer

This is an accurate description of earnings per share.

Question 7

Technical analysis focuses on supply and demand,using charts and computer programs to project stock trends.

Accepted Answer

Technical analysis does indeed focus on supply and demand and often involves the use of charts and computer programs to identify patterns and project future stock trends.

Question 8

Jessica wanted to gauge stock performance in general.She found a useful tool that measured the stock prices of 30 large industrial firms,called the

Accepted Answer

The Dow Jones Industrial Average is a stock market index that measures the stock performance of 30 large industrial firms in the United States. It is widely used as an indicator of the overall stock market performance. The other options listed also measure stock performance in some way, but they may not necessarily measure the performance of large industrial firms as specifically as the Dow Jones Industrial Average does.

Question 9

Because the Dow Jones Index Average is based on the movement of only ________ large,well-established stocks,many investors believe it reflects price movements for large firms rather than for the general market.

Accepted Answer

The Dow Jones Index Average is based on the movement of only 30 large,well-established stocks. Therefore, many investors believe it reflects price movements for large firms rather than for the general market.

Question 10

A stock market characterized by ________ prices is termed a bear market.

Accepted Answer

A bear market is characterized by falling prices. In this market, investors generally have a pessimistic outlook and tend to sell off their stock holdings, resulting in a decline in share prices.

Question 11

The S&P 500

Accepted Answer

The answer of The S&P 500
...

Question 12

If you are very optimistic about the ability of firms to earn profits today and in the immediate future,what type of investor philosophy do you exhibit?

Accepted Answer

Being optimistic about the ability of firms to earn profits today and in the immediate future indicates a positive outlook on the market, which is characteristic of a bullish investor philosophy. A bullish investor believes that the market will continue to rise and that there are opportunities to make profitable investments.

Question 13

The letters or characters that represent a stock is known as the stock's

Accepted Answer

The letters or characters that represent a stock is known as the stock's ticker symbol. It is a unique identifier assigned to a stock by the stock exchange on which it trades.

Question 14

The price/earnings ratio is an indication of how much investors are willing to pay for a dollar of the company's earnings.

Accepted Answer

The price/earnings ratio (P/E ratio) is a valuation ratio that compares a company's current share price to its per-share earnings. It is a measure of the price paid by investors for each dollar of earnings generated by the company. Therefore, a higher P/E ratio indicates that investors are willing to pay more for each dollar of the company's earnings, while a lower P/E ratio suggests that investors are not willing to pay as much.

Question 15

The DJIA weights stocks based on

Accepted Answer

The Dow Jones Industrial Average (DJIA) weights stocks based on their relative prices, meaning the index is price-weighted. Stocks with higher prices have more influence on the index's performance.

Question 16

The ________ is a common stock indicator,consisting of 30 large industrial firms,and is used to indicate how well stocks have done.

Accepted Answer

The DJIA (Dow Jones Industrial Average) is a common stock indicator consisting of 30 large industrial firms and is frequently used as a gauge for how well stocks are performing. The other options (DAIA, CMIA, and SPFA) are not commonly used stock indicators.

Question 17

If you wanted information about how the entire stock market is performing,which index would provide you with information on virtually all types and sizes of companies?

Accepted Answer

The Wilshire 5000 is the most comprehensive index, covering virtually all publicly-traded companies headquartered in the U.S., making it the best choice for understanding the performance of the entire stock market across all types and sizes of companies.

Question 18

Technical analysis is a stock valuation technique that incorporates expected future earnings of the company,the riskiness of the companies cash flows,and interest rates in the markets in determining the current value of the stock.

Accepted Answer

Technical analysis is a stock valuation technique that uses charts and past market data to predict future stock prices, rather than considering the company's expected future earnings or interest rates. This definition describes fundamental analysis.

Question 19

When you got home after work,you saw on the news that the S&P was down by 20 points.Which of the following is true?

Accepted Answer

The S&P 500 is a market index that represents the stock performance of 500 large companies listed on stock exchanges in the United States. A decrease in the S&P 500 index means the overall market or a significant portion of it has gone down, but it does not mean that every stock within the index or in an individual's portfolio has decreased by the same amount. Some stocks may have increased in value, while others may have decreased, reflecting the diverse performance of individual companies.

Question 20

The discounted dividends valuation model states that the value of a share of stock is the present value of its future dividends.

Accepted Answer

The discounted dividends valuation model is also known as the dividend discount model and it values a stock based on the estimation of its future dividends. The model calculates the discounted present value of future expected cash flow and determines what investors should pay for the stock.

Quiz 12: Investing in Stocks