Exam 18: Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Consider a stock with a 50 percent probability of zero net earnings and a 50 percent probability of net earnings equal to $20 per share each year continuously in the future. Furthermore, assume that people are risk averse: That is, they will have to be compensated for uncertainty accompanying variation in their future wealth. If the interest rate were 5 percent, how much would people be willing to pay for a share of this stock?

(Multiple Choice)

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Question 61

Which of the following is true?

(Multiple Choice)

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Question 62

During 1982-1997, stock prices increased substantially. Which of the following helped to boost stock prices during this period?

(Multiple Choice)

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Question 63

The random walk theory implies that stock prices

(Multiple Choice)

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Question 64

Historically, when a diverse set of stocks are held over a lengthy time period, stocks have yielded a rate of return and the variation in the rate of return has been . (Fill in the blanks.)

(Multiple Choice)

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Question 65

Stock analysts often argue that lower interest rates are good for the stock market. Does this argument make sense?

(Multiple Choice)

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Question 66

Which of the following would reduce the risk of an investment in the stock market?

(Multiple Choice)

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Question 67

If Apple Computer Corporation constitutes a sizeable share of your current stock holdings, the purchase of which of the following stocks would provide you with the greatest reduction in risk?

(Multiple Choice)

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Question 68

The random walk theory of stock prices indicates that

(Multiple Choice)

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Question 69

Which of the following is true?

(Multiple Choice)

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Question 70

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Exam 18: Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Which of the following is true?

During 1982-1997, stock prices increased substantially. Which of the following helped to boost stock prices during this period?

The random walk theory implies that stock prices

Historically, when a diverse set of stocks are held over a lengthy time period, stocks have yielded a ____ rate of return and the variation in the rate of return has been ____. (Fill in the blanks.)

Stock analysts often argue that lower interest rates are good for the stock market. Does this argument make sense?

Which of the following would reduce the risk of an investment in the stock market?

If Apple Computer Corporation constitutes a sizeable share of your current stock holdings, the purchase of which of the following stocks would provide you with the greatest reduction in risk?

The random walk theory of stock prices indicates that

Which of the following is true?

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

Filters

Historically, when a diverse set of stocks are held over a lengthy time period, stocks have yielded a rate of return and the variation in the rate of return has been . (Fill in the blanks.)