Special Topic 3 : The Stock Market: Its Function, Performance, and Potential as an Investment Opportunity

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

Which of the following is true?

Which of the following is true?

Jane is a 22-year-old college graduate. She has just started working at a job that pays her $75,000 per year. Since you have had an economics course, Jane asks you for advice on where to invest the money she is saving for her retirement. What do you recommend?

Which of the following indicates why the role of vigilant investors and investment fund managers is important for the efficient operation of an economy?

The theory that stock prices reflect all available information and that the future movement of stock prices is unpredictable is called the

If an investor's primary stock holding is currently Exxon Mobil, the purchase of which of the following stocks would provide the investor with the largest reduction in risk?

(I) The market for new issues of stock is called the primary market. (II) The New York Stock Exchange is an example of a secondary market in which previously issued shares are traded between investors.

Which of the following is true?

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.)

Compared to other investments such as bonds, historically a diverse set of stocks held over a lengthy time period (for example, 30 or 40 years) has yielded a

"My broker studies the stock market and the management of specific firms. When he advises me to buy, I listen because he is an expert." Analyze this view.

Investors can make their investments in corporate stocks less risky by

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

Which of the following is true?

Does it ever make sense to purchase a stock that has never paid a dividend? Explain.

Which of the following will tend to result in the least variation in the expected real rate of return from the ownership of stocks?

Since 1802, the American stock market has yielded an average annual real return (the return adjusted for inflation) of approximately

Which of the following would tend to increase the value of a future stream of income?

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?