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

Using each of the following description, identify which key term or concept presented in this chapter matches them. a. The price for buying securities from the public as posted by security dealers. b. A party to a contract or other agreement who takes advantage of the other parties involved to benefit his or her self-interest. c. Purchasing or selling the securities of a firm by someone having access to privileged information about the firm. d. The prices of securities and other assets fluctuate randomly around their intrinsic values and return quickly to equilibrium. e. Pockets of inefficiency in the availability and use of information.

The current price of a financial asset equals its fundamental value given all possible states of the world according to the efficient markets hypothesis (EMH).

The Dow Jones reports on the following financial index

The Sarbanes Oxley Accounting Practices Act (SARBOX) was signed in the law in 2002 in response to the trouble with Enron and other widely publicized corporate scandals.

The optimal forecast of next period's market value (price) of an asset, given this period's set of information is the asset's current price according to the efficient market's hypothesis.

If a household sells stock to another household, this transaction will:

People harmed by insider trading may file civil suits for recovery of their losses.

The Dow Jones industrial average is over 100 years old.

Which of the following regulations are not designed to improve the flow of information between buyers and sellers?

A comprehensive stock-index would be

In an efficient market asset trades that generate consistent excess returns are certainly possible.

The NIA accounting system contains data on the nation's production of goods and services, income flows, investment spending, consumption and total savings.

The statement "Investors who trade using publicly available information should expect to earn normal profits" best reflects the:

One of the most complete listings of daily price and yield quotations on securities appears in:

In addition to assigning credit risk ratings to borrowing institutions, Moody's also

Under the efficient markets hypothesis (EMH) each asset's fundamental value will vary with the:

In a sources-and-uses-of-funds statement as constructed in the Flow of Funds Accounts, total uses of funds are equal to the change in financial assets plus the change in liabilities for a given sector.

A method to deal with information asymmetries is to

In the Flow of Funds Accounts net financial investment for a sector equals net borrowing plus net current savings minus net real investment on a sources-and-uses-of-funds statement.

Items reported on a financial balance sheet in the Flow of Funds Accounts represent changes over time of items selected from a sources-and-uses-of-funds statement prepared for the same sector.