Exam 3: Financial Indices, Market Information, and Economic Data

The Federal Reserve's Flow of Funds Accounts (FOF) have several limitations or deficiencies. Among the limitations or deficiencies discussed in the text were:

In 2008, the US gross domestic product was $54 trillion.

When some individuals and institutions have access to information concerning the true value and risk of financial assets, which others do not, it is referred to as the efficient market hypothesis.

A comprehensive stock-index would be

Dun & Bradstreet credit ratings are a useful source of data on individual firms.

According to the efficient markets hypothesis (EMH) any deviation of actual returns from the expected returns on financial assets lying along the SML should be:

Please complete the following equations based on your knowledge of the Federal Reserve's Flow of Funds Accounts: Current Surplus + Net Increase in-Plant and Equipment = ____ for a sector Liabilities for Expenditures for a sector The item which belongs on the right hand side of the equals sign is:

In 2008, of the $14.4 trillion gross domestic product of the United States, approximately

Sound financial decisions require adequate and accurate financial information.

Using each of the following description, identify which key term or concept presented in this chapter matches them. a. Change in liabilities outstanding over specified period. b. Change in net worth over a particular time span. c. Net change in real assets over specified time interval. d. Net change in financial assets over particular time span. e. A financial report showing changes in financial and real assets, net worth and outstanding liabilities over a particular time period.

In 2008 the United States imported approximately $700 Trillion more than it exported.

In addition to research studies on the performance and financial condition of businesses, Moody's also

Fiduciary duty relates to "lemons and plums" in used-car sales.

Systematic risk is the kind of risk the whole asset market faces that cannot be eliminated by simple diversification.

The adverse selection problem exists when an institution charges a price that encourages more high-cost customers to come in than low-cost customers.

The strong form of the efficient market hypothesis states that all investors, including those with inside information, will earn only a normal profit.

The S&P 600 Index consists of small Businesses.

According to the efficient markets hypothesis (EMH) an asset's current price is the best estimate of that asset's expected fundamental value.

The New York Stock Exchange composite index is considered to be a broader price index then Standard & Poor's composite index.

The additional stocks in the S&P 500 are the shares at 40 utility, 20 transportation and 40 financial company stocks not included in the S&P 400.