Exhibit 5.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $\begin{array}{lllrlll} &\text { Stock Price } &&&\text { \# Shares }\\ &\mathrm{X} & \mathrm{Y} & \mathrm{Z} & \mathrm{X} & \mathrm{Y} & \mathrm{Z} \\ \hline \text { Jan. } 13,2005 & 20 & 40 & 30 & 1000 & 2000 & 1000^{*} \\ \text { Jan. } 14,2005 & 25 & 42 & 18 & 1000 & 2000 & 2000 \\ \text { Jan. } 15,2005 & 27 & 45 & 8 & 1000 * * & 2000 & 2000 \\ \text { Jan. } 16,2005 & 20 & 40 & 10 & 3000 & 2000 & 2000 \end{array}$ *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 5.2. Calculate a price weighted average for January 13th.

A) 32 B) 30 C) 36.13 D) 34 E) None of the above A) 32 B) 30 C) 36.13 D) 34 E) None of the above B

Exhibit 5.6 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) \[\begin{array} { c c c c } & & { \text { Price } } \\ \text { Stock } & \text { Number of Shares } & \text { Day T } & \text { Day T + 1 } \\ \hline \text { Q } & 5,000,000 & 80 & 95 \\ R & 8,000,000 & 60 & 55 \\ \text { S } & 15,000,000 & 20 & 24 \end{array}\] -Refer to Exhibit 5.6. If an equal-weighted index is constructed on Day T with $10,000 in each stock, what is the percentage change in wealth for this index on Day T + 1? Assume a base index value of 100 on Day T.

A) 8.65% B) 10.14% C) 15.69% D) 30.42% E) 47.08% A) 8.65% B) 10.14% C) 15.69% D) 30.42% E) 47.08%

Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) \[\begin{array} { c c c c c } \text { Stock } & \begin{array} { c } \text { 31-Dec-03 } \\ \text { Price } \end{array} & \begin{array} { c } \text { 31-Dec-03 } \\ \text { Shares } \end{array} & \begin{array} { c } \text { 31-Dec-04 } \\ \text { Price } \end{array} & \begin{array} { c } \text { 31-Dec-04 } \\ \text { Shares } \end{array} \\ \hline W & \$ 75.00 & 10000 & \$ 50.00 & 20000 \\ \text { X } & \$ 150.00 & 5000 & \$ 65.00 & 10000 \\ \text { Y } & \$ 25.00 & 20000 & \$ 35.00 & 20000 \\ Z & \$ 40.00 & 25000 & \$ 50.00 & 25000 \end{array}\] Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 5.5. Calculate the percentage return in the unweighted index (geometric mean) for the period Dec 31, 2003 to Dec 31, 2004. Assume a base index value of 100. Base year is Dec 31, 2003.

A) 19.25% B) 21.25% C) 51.25% D) 5.25% E) 100.25% A) 19.25% B) 21.25% C) 51.25% D) 5.25% E) 100.25%

Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) \[\begin{array} { c c c c c } \text { Stock } & \begin{array} { c } \text { 31-Dec-03 } \\ \text { Price } \end{array} & \begin{array} { c } \text { 31-Dec-03 } \\ \text { Shares } \end{array} & \begin{array} { c } \text { 31-Dec-04 } \\ \text { Price } \end{array} & \begin{array} { c } \text { 31-Dec-04 } \\ \text { Shares } \end{array} \\ \hline W & \$ 75.00 & 10000 & \$ 50.00 & 20000 \\ \text { X } & \$ 150.00 & 5000 & \$ 65.00 & 10000 \\ \text { Y } & \$ 25.00 & 20000 & \$ 35.00 & 20000 \\ Z & \$ 40.00 & 25000 & \$ 50.00 & 25000 \end{array}\] Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 5.5. Calculate the percentage return in the price weighted series for the period Dec 31, 2000 to Dec 31, 2004.

A) 12.68% B) 20.00% C) 21.76% D) 33.33% E) 40.00% A) 12.68% B) 20.00% C) 21.76% D) 33.33% E) 40.00%

Exhibit 5.4 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) \[\begin{array} { c c } \text { Year } & \text { \% Price Change for Stock Index } \\ \hline 2000 & 8.0 \% \\ 2001 & 10.0 \% \\ 2002 & - 14.0 \% \\ 2003 & 20.0 \% \\ 2004 & - 10.0 \% \end{array}\] -Refer to Exhibit 5.4. Calculate the average annual rate of change for this index for the 5 year period using the arithmetic mean.

A) 0.28% B) 1.28% C) 2.80% D) 3.58% E) 6.38% A) 0.28% B) 1.28% C) 2.80% D) 3.58% E) 6.38%

Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) \[\begin{array} { c c c c c } \text { Stock } & \begin{array} { c } \text { 31-Dec-03 } \\ \text { Price } \end{array} & \begin{array} { c } \text { 31-Dec-03 } \\ \text { Shares } \end{array} & \begin{array} { c } \text { 31-Dec-04 } \\ \text { Price } \end{array} & \begin{array} { c } \text { 31-Dec-04 } \\ \text { Shares } \end{array} \\ \hline W & \$ 75.00 & 10000 & \$ 50.00 & 20000 \\ \text { X } & \$ 150.00 & 5000 & \$ 65.00 & 10000 \\ \text { Y } & \$ 25.00 & 20000 & \$ 35.00 & 20000 \\ Z & \$ 40.00 & 25000 & \$ 50.00 & 25000 \end{array}\] Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 5.5. Calculate the unweighted index (geometric mean) for Dec 31, 2004. Assume a base index value of 100. The base year is Dec 31, 2003.

A) 119.25 B) 121.25 C) 151.25 D) 95.25 E) 100.25 A) 119.25 B) 121.25 C) 151.25 D) 95.25 E) 100.25

Exhibit 5.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $\begin{array}{lllrlll} &\text { Stock Price } &&&\text { \# Shares }\\ &\mathrm{X} & \mathrm{Y} & \mathrm{Z} & \mathrm{X} & \mathrm{Y} & \mathrm{Z} \\ \hline \text { Jan. } 13,2005 & 20 & 40 & 30 & 1000 & 2000 & 1000^{*} \\ \text { Jan. } 14,2005 & 25 & 42 & 18 & 1000 & 2000 & 2000 \\ \text { Jan. } 15,2005 & 27 & 45 & 8 & 1000 * * & 2000 & 2000 \\ \text { Jan. } 16,2005 & 20 & 40 & 10 & 3000 & 2000 & 2000 \end{array}$ *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 5.2. Calculate a price weighed average for January 15th.

A) 30 B) 36.13 C) 32 D) 34 E) None of the above A) 30 B) 36.13 C) 32 D) 34 E) None of the above

Exhibit 5.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) \[\begin{array} { c c c c } \text { Companies } & \begin{array} { c } \text { Number of shares } \\ \text { outstanding } \end{array} & \begin{array} { c } \text { Closing Prices } \\ \text { Day T } \end{array} & \begin{array} { c } \text { (per share) } \\ \text { Day } \mathbf { T } + \mathbf { 1 } \end{array} \\ \hline 1 & 2,000 & \$ 30.00 & \$ 25.00 \\ 2 & 7,000 & 55.00 & 60.00 \\ 3 & 5,000 & 20.00 & 25.00 \\ 4 & 4,000 & 40.00 & 45.00 \end{array}\] -Refer to Exhibit 5.1. Compute an unweighted price indicator series, using geometric means. What is the percentage change in the index from Day T to Day T+1? Assume a base index value of 100 on Day T.

A) 5.35% B) 7.48% C) 9.93% D) 6.33% E) None of the above A) 5.35% B) 7.48% C) 9.93% D) 6.33% E) None of the above

Exhibit 5.4 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) \[\begin{array} { c c } \text { Year } & \text { \% Price Change for Stock Index } \\ \hline 2000 & 8.0 \% \\ 2001 & 10.0 \% \\ 2002 & - 14.0 \% \\ 2003 & 20.0 \% \\ 2004 & - 10.0 \% \end{array}\] -Refer to Exhibit 5.4. Calculate the average annual rate of change for this index for the 5 year period using the geometric mean.

A) 0.09% B) 1.99% C) 3.99% D) 4.50% E) 4.67% A) 0.09% B) 1.99% C) 3.99% D) 4.50% E) 4.67%

Exam 5: Security-Market Indexes

Exhibit 5.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stock Price \# Shares Jan. 13,2005 20 40 30 1000 2000 100 Jan. 14,2005 25 42 18 1000 2000 2000 Jan. 15,2005 27 45 8 1000** 2000 2000 Jan. 16,2005 20 40 10 3000 2000 2000 *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 5.2. Calculate a price weighted average for January 13th.

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

B

Which of the following is true of the various market index series?

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(Multiple Choice)

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Question 2

Correct Answer:

Verified

A

Which index is created by first deriving the initial total market value of all stocks used in the index?

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

D

A price-weighted index such as the DJIA is a geometric mean of current stock prices.

(True/False)

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Question 4

Exhibit 5.6 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Price Stock Number of Shares Day T Day T + 1 Q 5,000,000 80 95 R 8,000,000 60 55 S 15,000,000 20 24 -Refer to Exhibit 5.6. If an equal-weighted index is constructed on Day T with $10,000 in each stock, what is the percentage change in wealth for this index on Day T + 1? Assume a base index value of 100 on Day T.

(Multiple Choice)

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Question 5

Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stock 31-Dec-03 Price 31-Dec-03 Shares 31-Dec-04 Price 31-Dec-04 Shares W \ 75.00 10000 \ 50.00 20000 X \ 150.00 5000 \ 65.00 10000 Y \ 25.00 20000 \ 35.00 20000 Z \ 40.00 25000 \ 50.00 25000 Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 5.5. Calculate the percentage return in the unweighted index (geometric mean) for the period Dec 31, 2003 to Dec 31, 2004. Assume a base index value of 100. Base year is Dec 31, 2003.

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Question 6

Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stock 31-Dec-03 Price 31-Dec-03 Shares 31-Dec-04 Price 31-Dec-04 Shares W \ 75.00 10000 \ 50.00 20000 X \ 150.00 5000 \ 65.00 10000 Y \ 25.00 20000 \ 35.00 20000 Z \ 40.00 25000 \ 50.00 25000 Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 5.5. Calculate the percentage return in the price weighted series for the period Dec 31, 2000 to Dec 31, 2004.

(Multiple Choice)

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Question 7

An example of a value weighted stock market indicator series is the

(Multiple Choice)

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Question 8

Exhibit 5.4 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Year \% Price Change for Stock Index 2000 8.0\% 2001 10.0\% 2002 -14.0\% 2003 20.0\% 2004 -10.0\% -Refer to Exhibit 5.4. Calculate the average annual rate of change for this index for the 5 year period using the arithmetic mean.

(Multiple Choice)

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Question 9

The NYSE series should have higher rates of return and risk measures than the AMEX and OTC series.

(True/False)

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Question 10

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

(Multiple Choice)

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Question 11

The Dow Jones Industrial Average is a value weighted average.

(True/False)

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Question 12

A price weighted series is disproportionately influenced by larger capitalization companies.

(True/False)

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Question 13

A value weighted index automatically adjusts for stock splits.

(True/False)

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Question 14

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

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Question 15

Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stock 31-Dec-03 Price 31-Dec-03 Shares 31-Dec-04 Price 31-Dec-04 Shares W \ 75.00 10000 \ 50.00 20000 X \ 150.00 5000 \ 65.00 10000 Y \ 25.00 20000 \ 35.00 20000 Z \ 40.00 25000 \ 50.00 25000 Stocks W and X had 2 for 1 splits after the close on Dec 31, 2003. -Refer to Exhibit 5.5. Calculate the unweighted index (geometric mean) for Dec 31, 2004. Assume a base index value of 100. The base year is Dec 31, 2003.

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Question 16

Exhibit 5.2 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Stock Price \# Shares Jan. 13,2005 20 40 30 1000 2000 100 Jan. 14,2005 25 42 18 1000 2000 2000 Jan. 15,2005 27 45 8 1000** 2000 2000 Jan. 16,2005 20 40 10 3000 2000 2000 *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 5.2. Calculate a price weighed average for January 15th.

(Multiple Choice)

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Question 17

To solve comparability problems across countries, global equity indexes with consistent sample selection, weighting and computational procedure have been developed.

(True/False)

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Question 18

Exhibit 5.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Companies Number of shares outstanding Closing Prices Day T (per share) Day + 1 2,000 \ 30.00 \ 25.00 2 7,000 55.00 60.00 3 5,000 20.00 25.00 4 4,000 40.00 45.00 -Refer to Exhibit 5.1. Compute an unweighted price indicator series, using geometric means. What is the percentage change in the index from Day T to Day T+1? Assume a base index value of 100 on Day T.

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Question 19

Exhibit 5.4 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Year \% Price Change for Stock Index 2000 8.0\% 2001 10.0\% 2002 -14.0\% 2003 20.0\% 2004 -10.0\% -Refer to Exhibit 5.4. Calculate the average annual rate of change for this index for the 5 year period using the geometric mean.

(Multiple Choice)

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Question 20

Which of the following is true of the various market index series?

Which index is created by first deriving the initial total market value of all stocks used in the index?

A price-weighted index such as the DJIA is a geometric mean of current stock prices.

An example of a value weighted stock market indicator series is the

Exhibit 5.4 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Year \% Price Change for Stock Index 2000 8.0\% 2001 10.0\% 2002 -14.0\% 2003 20.0\% 2004 -10.0\% -Refer to Exhibit 5.4. Calculate the average annual rate of change for this index for the 5 year period using the arithmetic mean.

The NYSE series should have higher rates of return and risk measures than the AMEX and OTC series.

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

The Dow Jones Industrial Average is a value weighted average.

A price weighted series is disproportionately influenced by larger capitalization companies.

A value weighted index automatically adjusts for stock splits.

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

To solve comparability problems across countries, global equity indexes with consistent sample selection, weighting and computational procedure have been developed.

Exhibit 5.4 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Year \% Price Change for Stock Index 2000 8.0\% 2001 10.0\% 2002 -14.0\% 2003 20.0\% 2004 -10.0\% -Refer to Exhibit 5.4. Calculate the average annual rate of change for this index for the 5 year period using the geometric mean.

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Organization and Functioning of Securities Markets

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Introduction to Security Valuation

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Equity Portfolio Management Strategies

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts, Convertible Securities, and Other Embedded Derivatives

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

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