Question 1

In a price weighted average stock market indicator series, the following type of stock has the greatest influence:

Accepted Answer

A)   the stock with the highest price.
B)   the stock with the lowest price.
C)   the stock with the highest market capitalization.
D)   the stock with the lowest market capitalization.
E)   the stock with the highest P/E ratio.F) A) and B)
G) B) and C)

Question 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 4.2. Calculate a value weighted index for January 16th if the initial index value is 100.

Accepted Answer

A)   123.07
B)   100.00
C)   102.31
D)   111.54
E)   121.32F) C) and D)
G) B) and D)

Question 3

A benchmark measures the performance by portfolio managers.

Accepted Answer

A) True 
 B)False

Question 4

For an indexed portfolio, the fund manager will typically attempt to replicate the composition of the particular index exactly.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)   Morgan Stanley Capital International Indexes
B)   Dow Jones World Stock Index
C)   FT/S & P-Actuaries World Indexes
D)   Merrill Lynch-Wilshire World Indexes
E)   Brinson Partner Global Security Market Index (GSMI) F) C) and D)
G) A) and B)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 4.5. Calculate the value weighted index for Dec 31, 2003, after the splits. Assume a base index value of 100. The base year is Dec 31, 2003.

Accepted Answer

A)   72.5
B)   81.69
C)   100.0
D)   120.0
E)   121.25F) None of the above
G) A) and B)

Question 8

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) 
 
-Refer to Exhibit 4.3. Calculate the average annual rate of change for GB Industries for the five-year period using the geometric mean.

Accepted Answer

A)   9.7800%
B)   0.0978%
C)   9.0700%
D)   0.0970%
E)   3.6400%F) A) and E)
G) A) and C)

Question 9

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 4.2. What is the divisor at the beginning of January 16th?

Accepted Answer

A)   1.9375
B)   3.0
C)   2.5
D)   2.2734
E)   3.2852F) All of the above
G) D) and E)

Question 10

The New York Stock Exchange Index is based on a sample of all of the New York Stock Exchange stocks.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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 4.2. Calculate a value weighted index for Jan. 14th if the initial index value is 100.

Accepted Answer

A)   100
B)   102.31
C)   123.07
D)   111.54
E)   121.32F) None of the above
G) A) and D)

Question 13

In a value weighted index,

Accepted Answer

A)   exchange rate fluctuations have a large impact.
B)   exchange rate fluctuations have a small impact.
C)   large companies have a disproportionate influence on the index.
D)   small companies have an exaggerated effect on the index.
E)   None of these are correct.F) A) and B)
G) A) and D)

Question 14

The most common way to test a portfolio manager's performance is to compare the portfolio return to a benchmark.

Accepted Answer

A) True 
 B)False

Question 15

Studies of correlations among monthly U.S. bond price index returns have found

Accepted Answer

A)   low correlations between investment grade bonds and high yield bonds.
B)   high correlations between investment grade bonds and high yield bonds.
C)   low correlations between various investment grade bond indexes.
D)   negative correlations between investment grade bonds and high yield bonds.
E)   None of these are correct.F) A) and C)
G) None of the above

Question 16

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) 
 
-Refer to Exhibit 4.6. Calculate a price weighted average for Day T.

Accepted Answer

A)   46.20
B)   53.33
C)   54.12
D)   92.39
E)   108.23F) B) and C)
G) D) and E)

Question 17

Which of the following is NOT a value-weighted series?

Accepted Answer

A)   NASDAQ Industrial Index
B)   Dow Jones Industrial Average
C)   Wilshire 5000 Equity Index
D)   American Stock Exchange Series
E)   NASDAQ Composite IndexF) A) and B)
G) B) and E)

Question 18

The Dow Jones Industrial Average is a value weighted average.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A style index created to track ethical funds is known as the

Accepted Answer

A)   green index.
B)   SRI index.
C)   EAFE index.
D)   freedom index.
E)   ethical index.F) None of the above
G) A) and B)

Exam 4: Security Market Indexes and Index Funds

Studies of correlations among monthly U.S. bond price index returns have found

Correct Answer
verified

The Dow Jones Industrial Average is a value weighted average.

Correct Answer
verified

The New York Stock Exchange Index is based on a sample of all of the New York Stock Exchange stocks.

Correct Answer
verified

Which of the following is NOT a value-weighted series?

Correct Answer
verified

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

Correct Answer
verified

In a value weighted index,

Correct Answer
verified

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

Correct Answer
verified

A style index created to track ethical funds is known as the

Correct Answer
verified

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

Correct Answer
verified

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.6. Calculate a price weighted average for Day T.

Correct Answer
verified

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.3. Calculate the average annual rate of change for GB Industries for the five-year period using the geometric mean.

Correct Answer
verified

Correct Answer
verified

For an indexed portfolio, the fund manager will typically attempt to replicate the composition of the particular index exactly.

Correct Answer
verified

In a price weighted average stock market indicator series, the following type of stock has the greatest influence:

Correct Answer
verified

A benchmark measures the performance by portfolio managers.

Correct Answer
verified

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 4.5. Calculate the value weighted index for Dec 31, 2003, after the splits. Assume a base index value of 100. The base year is Dec 31, 2003.

Correct Answer
verified

The most common way to test a portfolio manager's performance is to compare the portfolio return to a benchmark.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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 4.2. What is the divisor at the beginning of January 16th?

Correct Answer
verified

Exam 4: Security Market Indexes and Index Funds

Studies of correlations among monthly U.S. bond price index returns have found

Correct AnswerverifiedShow Answer

The Dow Jones Industrial Average is a value weighted average.

Correct AnswerverifiedShow Answer

The New York Stock Exchange Index is based on a sample of all of the New York Stock Exchange stocks.

Correct AnswerverifiedShow Answer

Which of the following is NOT a value-weighted series?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a value weighted index,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A style index created to track ethical funds is known as the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.6. Calculate a price weighted average for Day T.

Correct AnswerverifiedShow Answer

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.3. Calculate the average annual rate of change for GB Industries for the five-year period using the geometric mean.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For an indexed portfolio, the fund manager will typically attempt to replicate the composition of the particular index exactly.

Correct AnswerverifiedShow Answer

In a price weighted average stock market indicator series, the following type of stock has the greatest influence:

Correct AnswerverifiedShow Answer

A benchmark measures the performance by portfolio managers.

Correct AnswerverifiedShow Answer

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 4.5. Calculate the value weighted index for Dec 31, 2003, after the splits. Assume a base index value of 100. The base year is Dec 31, 2003.

Correct AnswerverifiedShow Answer

The most common way to test a portfolio manager's performance is to compare the portfolio return to a benchmark.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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 4.2. What is the divisor at the beginning of January 16th?

Correct AnswerverifiedShow Answer

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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 4.5. Calculate the value weighted index for Dec 31, 2003, after the splits. Assume a base index value of 100. The base year is Dec 31, 2003.

Correct Answer
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