Question 1

All of the following are U.S.stock price indexes,EXCEPT:

Accepted Answer

A)  the Dow Jones Industrial. 
B)  the S&P 500. 
C)  the NASDAQ Composite. 
D)  the CPI. 
A)  the Dow Jones Industrial. 
B)  the S&P 500. 
C)  the NASDAQ Composite. 
D)  the CPI.

Question 2

When a speculative bubble bursts:

Accepted Answer

A)  people feel poorer because of lower stock prices and thus spend less. 
B)  employment usually increases. 
C)  there is minimal effect in the overall economy. 
D)  the effects are contained in the market whose prices have collapsed. 
A)  people feel poorer because of lower stock prices and thus spend less. 
B)  employment usually increases. 
C)  there is minimal effect in the overall economy. 
D)  the effects are contained in the market whose prices have collapsed.

Question 3

The NASDAQ:

Accepted Answer

A)  weights individual stocks equally. 
B)  gives greater weight to larger stocks than does the Dow. 
C)  gives greater weight to high-tech stocks than does the Dow. 
D)  has 30 stocks. 
A)  weights individual stocks equally. 
B)  gives greater weight to larger stocks than does the Dow. 
C)  gives greater weight to high-tech stocks than does the Dow. 
D)  has 30 stocks.

Question 4

Based on the efficient markets hypothesis,which of the following mutual funds has the better chance of beating the market in the long run?

Accepted Answer

A)  a low-fee fund that is actively managed by a highly respected fund manager 
B)  a passive fund that simply attempts to mimic a financial index such as the S&P 500 
C)  a portfolio of stocks that you choose,since nobody has more incentive to manage your money correctly than you do 
D)  Forget about it-it is nearly impossible to choose a fund that will systematically outperform the market. 
A)  a low-fee fund that is actively managed by a highly respected fund manager 
B)  a passive fund that simply attempts to mimic a financial index such as the S&P 500 
C)  a portfolio of stocks that you choose,since nobody has more incentive to manage your money correctly than you do 
D)  Forget about it-it is nearly impossible to choose a fund that will systematically outperform the market.

Question 5

In the stock market,profiting from inside information:

Accepted Answer

A)  is nearly impossible because of the efficient markets hypothesis. 
B)  can lead to above-normal market returns for a long period. 
C)  requires the investor to keep the information secret and not act for a long period. 
D)  requires purchasing or selling large quantities of the stock very quickly. 
A)  is nearly impossible because of the efficient markets hypothesis. 
B)  can lead to above-normal market returns for a long period. 
C)  requires the investor to keep the information secret and not act for a long period. 
D)  requires purchasing or selling large quantities of the stock very quickly.

Question 6

When a fund manager tries to pick stocks to outperform the market averages,the mutual fund is called a(n):

Accepted Answer

A)  active fund. 
B)  passive fund. 
C)  random walk fund. 
D)  loaded fund. 
A)  active fund. 
B)  passive fund. 
C)  random walk fund. 
D)  loaded fund.

Question 7

Briefly discuss the four pieces of advice on financial investment given in the text.

Accepted Answer

The four pieces of advice on financial i

Question 8

Why would stock for a high-end store with expensive clothing be considered risky in a recession?

Accepted Answer

A)  Consumers demand cheaper clothes in times of recession,and that company would be expected to make lower profits. 
B)  Consumers do not buy stock when recessions occur. 
C)  High-end clothing store stocks have low covariance with the market. 
D)  Stocks from such companies depend heavily on oil prices. 
A)  Consumers demand cheaper clothes in times of recession,and that company would be expected to make lower profits. 
B)  Consumers do not buy stock when recessions occur. 
C)  High-end clothing store stocks have low covariance with the market. 
D)  Stocks from such companies depend heavily on oil prices.

Question 9

If each of the approximately 320,000 securities and financial service agents in the United States bet on whether the market would go up or down for each of the next 10 years by flipping a coin,we would expect that approximately 312 agents would have been right 10 years in a row.This example suggests that:

Accepted Answer

A)  it is easy to beat the market averages. 
B)  famous investors like Warren Buffett may have merely been lucky. 
C)  there are above-normal profit opportunities in the stock market. 
D)  All of the answers are correct. 
A)  it is easy to beat the market averages. 
B)  famous investors like Warren Buffett may have merely been lucky. 
C)  there are above-normal profit opportunities in the stock market. 
D)  All of the answers are correct.

Question 10

The riskiest stocks are those that have a high positive correlation with the market as a whole.

Accepted Answer

A) True 
 B)False

Question 11

John Stossel picked Wall Street stocks at random,and his portfolio outperformed what proportion of expert stockbrokers and fund managers?

Accepted Answer

A)  50% 
B)  60% 
C)  80% 
D)  90% 
A)  50% 
B)  60% 
C)  80% 
D)  90%

Question 12

No investor will ever be able to consistently beat the market.

Accepted Answer

A) True 
 B)False

Question 13

The efficient markets hypothesis implies that:

Accepted Answer

A)  it is easy to earn above market rates of return using the appropriate investment strategies at the right time. 
B)  investors don't make mistakes when determining when to buy and sell stocks. 
C)  it is not possible to systematically pick stocks that outperform the market. 
D)  stock prices are never too high or too low;they always accurately reflect the underlying value of the company. 
A)  it is easy to earn above market rates of return using the appropriate investment strategies at the right time. 
B)  investors don't make mistakes when determining when to buy and sell stocks. 
C)  it is not possible to systematically pick stocks that outperform the market. 
D)  stock prices are never too high or too low;they always accurately reflect the underlying value of the company.

Question 14

The riskiest stocks tend to be those that:

Accepted Answer

A)  are positively correlated with the market. 
B)  are negatively correlated with the market. 
C)  have done well in the past. 
D)  have done poorly in the past. 
A)  are positively correlated with the market. 
B)  are negatively correlated with the market. 
C)  have done well in the past. 
D)  have done poorly in the past.

Question 15

The text argues that which statement is TRUE about Warren Buffett?

Accepted Answer

A)  His past performance has been purely a result of luck. 
B)  He has not been able to beat the market at any time. 
C)  He always beats the market using inside information. 
D)  It has become harder for him to beat the market over time. 
A)  His past performance has been purely a result of luck. 
B)  He has not been able to beat the market at any time. 
C)  He always beats the market using inside information. 
D)  It has become harder for him to beat the market over time.

Question 16

Figure: Mutual Funds   Refer to the figure.From this Mutual Funds figure (John Stossel dart-throwing experiment)we can say that:

Accepted Answer

A)  mutual funds typically outperform the S&P 500. 
B)  mutual fund managers are no smarter than monkeys. 
C)  knowledge of stock market behavior does not guarantee its predictability. 
D)  mutual funds can never outperform the stock market. 
A)  mutual funds typically outperform the S&P 500. 
B)  mutual fund managers are no smarter than monkeys. 
C)  knowledge of stock market behavior does not guarantee its predictability. 
D)  mutual funds can never outperform the stock market.

Question 17

It is always best to put all your "eggs" in one basket,with respect to investing.

Accepted Answer

A) True 
 B)False

Question 18

Suppose there is a rumor that Company X is about to merge with another very profitable company.Now suppose that a major broker spreads this rumor,and people take that broker seriously.Could this broker cause the company to "appear" to be a profitable stock to hold?

Accepted Answer

Yes,if enough people react to a predicti

Question 19

Which is NOT a typical index used to practice a buy-and-hold strategy?

Accepted Answer

A)  The Dow Jones Industrial Average 
B)  The Moody Index Scorecard 
C)  The Standard and Poor's 500 
D)  The NASDAQ Composite Index 
A)  The Dow Jones Industrial Average 
B)  The Moody Index Scorecard 
C)  The Standard and Poor's 500 
D)  The NASDAQ Composite Index

Question 20

Which of the following investment instruments would a risk-loving individual choose?

Accepted Answer

A)  government bonds 
B)  stocks from a company listed on the Dow Jones Industrial Average 
C)  stock from a very new company that has high growth potential 
D)  a low-risk mutual fund 
A)  government bonds 
B)  stocks from a company listed on the Dow Jones Industrial Average 
C)  stock from a very new company that has high growth potential 
D)  a low-risk mutual fund

All of the following are U.S.stock price indexes,EXCEPT:

When a speculative bubble bursts:

The NASDAQ:

Based on the efficient markets hypothesis,which of the following mutual funds has the better chance of beating the market in the long run?

In the stock market,profiting from inside information:

When a fund manager tries to pick stocks to outperform the market averages,the mutual fund is called a(n):

Briefly discuss the four pieces of advice on financial investment given in the text.

Why would stock for a high-end store with expensive clothing be considered risky in a recession?

The riskiest stocks are those that have a high positive correlation with the market as a whole.

John Stossel picked Wall Street stocks at random,and his portfolio outperformed what proportion of expert stockbrokers and fund managers?

No investor will ever be able to consistently beat the market.

The efficient markets hypothesis implies that:

The riskiest stocks tend to be those that:

The text argues that which statement is TRUE about Warren Buffett?

Figure: Mutual Funds Refer to the figure.From this Mutual Funds figure (John Stossel dart-throwing experiment)we can say that:

It is always best to put all your "eggs" in one basket,with respect to investing.

Suppose there is a rumor that Company X is about to merge with another very profitable company.Now suppose that a major broker spreads this rumor,and people take that broker seriously.Could this broker cause the company to "appear" to be a profitable stock to hold?

Which is NOT a typical index used to practice a buy-and-hold strategy?

Which of the following investment instruments would a risk-loving individual choose?

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 10: Stock Markets and Personal Finance

All of the following are U.S.stock price indexes,EXCEPT:

When a speculative bubble bursts:

The NASDAQ:

Based on the efficient markets hypothesis,which of the following mutual funds has the better chance of beating the market in the long run?

In the stock market,profiting from inside information:

When a fund manager tries to pick stocks to outperform the market averages,the mutual fund is called a(n):

Briefly discuss the four pieces of advice on financial investment given in the text.

Why would stock for a high-end store with expensive clothing be considered risky in a recession?

The riskiest stocks are those that have a high positive correlation with the market as a whole.

John Stossel picked Wall Street stocks at random,and his portfolio outperformed what proportion of expert stockbrokers and fund managers?

No investor will ever be able to consistently beat the market.

The efficient markets hypothesis implies that:

The riskiest stocks tend to be those that:

The text argues that which statement is TRUE about Warren Buffett?

Figure: Mutual Funds Refer to the figure.From this Mutual Funds figure (John Stossel dart-throwing experiment)we can say that:

It is always best to put all your "eggs" in one basket,with respect to investing.

Suppose there is a rumor that Company X is about to merge with another very profitable company.Now suppose that a major broker spreads this rumor,and people take that broker seriously.Could this broker cause the company to "appear" to be a profitable stock to hold?

Which is NOT a typical index used to practice a buy-and-hold strategy?

Which of the following investment instruments would a risk-loving individual choose?

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters