Practice Test Answers

28 verified answers1 views
21
Free Preview

Company A has a stock price of $50 and 10 million shares outstanding, Company B has a stock price of $80 and 5 million shares outstanding, and Company C has a stock price of $120 and 3 million shares outstanding. What is the first step in calculating the market-capitalization-weighted stock index?

A
Divide the sum of the company stock prices by the number of companies.
B
Subtract the total number of shares outstanding from the combined stock prices.
C
Add the total shares outstanding among the companies and divide the sum by three.
D
Multiply each company's stock price by its number of shares outstanding.
26

Which investment is a fixed investment?

A
a rental property, with income based on rental agreements
B
an account with a variable interest rate and no fixed term for withdrawal
C
a fund that invests in a variety of stocks, with returns based on market performance
D
an investment that pays a fixed interest rate semiannually and returns the principal at maturity
28

Based on the data, what can be inferred about the relationship between the stock prices of Company X and Company Y?

A
There is no correlation between the stock prices of Company X and Company Y.
B
There is a perfect positive correlation, meaning the increase in Company X's stock price is causing the increase in Company Y's stock price.
C
There is a perfect negative correlation between the stock prices of Company X and Company Y.
D
There is a perfect positive correlation, but this does not necessarily imply that Company X's stock price is causing Company Y's stock price to increase.

Did you find these answers helpful?