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Exam 5: Security-Market Indexes

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Question 1

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Exhibit 5.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 5.1. Assume that a stock price-weighted indicator consisted of the four issues with their prices. What are the values of the stock indicator for Day T and T + 1 and what is the percentage change?

A) 36.25, 38.75, 6.9%
B) 38.75, 36.25, -6.9%
C) 100, 106.9, 6.9%
D) 107.48, 106.33, 1.15%
E) None of the above

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Question 2

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A properly selected sample for use in constructing a market indicator series will consider the sample's source, size and

A) Breadth.
B) Average beta.
C) Value.
D) Variability.
E) Dividend record.

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Question 3

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An equally weighted indicator series is also known as an unweighted indicator series.

Exhibit 5.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) *2:1 Split on Stock Z after Close on Jan. 13, 2005 **3:1 Split on Stock X after Close on Jan. 15, 2005 The base date for index calculations is January 13, 2005 -Refer to Exhibit 5.2. Calculate a value weighted index for January 15th if the initial index value is 100.

Exhibit 5.6 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 5.6. If an equal-weighted index is constructed on Day T with $10,000 in each stock, what is the percentage change in wealth for this index on Day T + 1? Assume a base index value of 100 on Day T.

Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 5.5. Calculate the percentage return in the unweighted index (geometric mean) for the period Dec 31, 2003 to Dec 31, 2004. Assume a base index value of 100. Base year is Dec 31, 2003.

The general purpose of a market indicator series is to provide an overall indication of aggregate market changes or movements.

It is easier to construct an indicator series for bonds because of their relatively stable returns pattern.

Exhibit 5.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) *2:1 Split on Stock Z after Close on Jan. 13, 2005 **3:1 Split on Stock X after Close on Jan. 15, 2005 The base date for index calculations is January 13, 2005 -Refer to Exhibit 5.2. What is the divisor at the beginning of January 16th?

Which of the following is not a global equity indicator series?

Exhibit 5.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 5.1. For a value-weighted series, assume that Day T is the base period and the base value is 100. What is the new index value for Day T + 1 and what is the percentage change in the index from Day T?

Exhibit 5.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 5.7. What would be the total percentage change in an equally weighted portfolio of ABC?

The following are examples of Style Indexes

Index movements are influenced by differential prices of the components in a(n)

The NYSE series should have higher rates of return and risk measures than the AMEX and OTC series.

Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 5.5. Calculate the price weighted series for Dec 31, 2003, after the splits.

Exhibit 5.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) *2:1 Split on Stock Z after Close on Jan. 13, 2005 **3:1 Split on Stock X after Close on Jan. 15, 2005 The base date for index calculations is January 13, 2005 -Refer to Exhibit 5.2. Calculate a price weighted average for January 13th.

Exhibit 5.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) *2:1 Split on Stock Z after Close on Jan. 13, 2005 **3:1 Split on Stock X after Close on Jan. 15, 2005 The base date for index calculations is January 13, 2005 -Refer to Exhibit 5.2. Calculate a value weighted index for January 16th if the initial index value is 100.

The Dow Jones Industrial Average has been criticized for being blue-chip biased.

Exhibit 5.3 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 5.3. Calculate the average annual rate of change for GB Industries for the 5 year period using the geometric mean.