Question 1

A ________ series is obtained by adjusting the given time series for changes in prices, or inflation.

Accepted Answer

The answer of A ________ series is obtained by adjusting...

Question 2

Three firms, X, Y, and Z, operate in the same industry, although their products have different features and are priced differently. The following table provides the prices and the quantities sold (in units) during the period 2000 to 2002.   Which of the following is the Paasche price index for 2002 if the base period is 2000 and the current period is 2002?

Accepted Answer

A)  94.11 
B)  106.26 
C)  130 
D)  106.07 
A)  94.11 
B)  106.26 
C)  130 
D)  106.07

Question 3

Consider the following table providing the prices for three different brands of chocolate chip cookies during 2009 to 2010 in a particular country. (Prices are in the country's local currency.)   a. Compute the unweighted aggregate price index for 2010, using 2009 as the base year.
B) Interpret the result.

Accepted Answer

a. 75.47
b. The table shows that the pri

Question 4

Rita Jacob purchased a corporate bond at $650 a year ago. The price of the bond has now increased to $665.
A) What is Rita's capital gains yield from this investment?
B) If her investment return is 7%, what coupon payment must she have received?

Accepted Answer

a. 2.31%
b

Question 5

The following table provides the adjusted close prices of the shares of firm X for three consecutive months of the last year.   a. Compute the monthly return for May.
B) Compute the monthly return for June.

Accepted Answer

The answer of The following table provides the adjusted close...

Question 6

When the expected inflation rate is relatively low, a reasonable ________ to the Fisher equation is r = R - i.

Accepted Answer

The answer of When the expected inflation rate is relatively...

Question 7

Toyota Motor Corp., once considered a company synonymous with reliability and customer satisfaction, has being engulfed in a perfect storm with millions of cars recalled. The following table shows the monthly adjusted close price per share of Toyota from October 2009 to March 2010.   Which of the following is the simple price index for February 2010 with December 2009 as the base?

Accepted Answer

A)  112.47 
B)  88.91 
C)  94.85 
D)  105.43 
A)  112.47 
B)  88.91 
C)  94.85 
D)  105.43

Question 8

Consider the following data on the consumer price index in a country.   a. Compute the annual inflation for 2005.
B) Compute the annual inflation for 2006.

Accepted Answer

The answer of Consider the following data on the consumer...

Question 9

The ________ rate is the percentage rate of change of a price index over time.

Accepted Answer

The answer of The ________ rate is the percentage rate...

Question 10

Index numbers provide direct comparisons of prices not only with respect to the base year, but also between non-base years.

Accepted Answer

A) True 
 B)False

Question 11

Consider the following information about the price and the price index of a popular book over three years.   What was the price index for this book in 2010?

Accepted Answer

A)  72 
B)  92.59 
C)  107.2 
D)  108 
A)  72 
B)  92.59 
C)  107.2 
D)  108

Question 12

Which of the following is the correct expression for the Laspeyres price index?

Accepted Answer

A)    × 100 
B)    × 100 
C)    × 100 
D)    × 100 
A)    × 100 
B)    × 100 
C)    × 100 
D)    × 100

Question 13

The following table shows the value of CPI for three years in a country.   Which of the following is the annual inflation rate for 2004?

Accepted Answer

A)  4% 
B)  1.46% 
C)  3.36% 
D)  4.87% 
A)  4% 
B)  1.46% 
C)  3.36% 
D)  4.87%

Question 14

Which of the below is not required to compute an investment return?

Accepted Answer

A)  Interest rate 
B)  Price of the asset at purchase 
C)  Price of the asset at sale 
D)  Distributed income 
A)  Interest rate 
B)  Price of the asset at purchase 
C)  Price of the asset at sale 
D)  Distributed income

Question 15

If the average price for gasoline in 2001 and 2006 was $1.46 per gallon and $2.59, respectively, the simple price index for 2006 is ________%.

Accepted Answer

The answer of If the average price for gasoline in...

Question 16

There is no need to have a constant base value for a price index.

Accepted Answer

A) True 
 B)False

Question 17

Toyota Motor Corp., once considered a company synonymous with reliability and customer satisfaction, has being engulfed in a perfect storm with millions of cars recalled. The following table shows the monthly adjusted close price per share of Toyota from October 2009 to March 2010.   If the price index in April 2010 was 96.84, using December 2009 as the base, which of the following is the missing price per share for April 2010?

Accepted Answer

A)  $86.94 
B)  $80.84 
C)  $86.21 
D)  $81.50 
A)  $86.94 
B)  $80.84 
C)  $86.21 
D)  $81.50

Question 18

Joanna Williams purchased a one-year Treasury bill at $100. This bond does not have any coupon payment, but Joanna will get $105 at maturity. The inflation rate in a year's time is expected to be 1.3%.
A) What is the income yield from this investment?
B) What is the nominal rate of return from this investment?
C) What is the real rate of return from this investment?

Accepted Answer

a. 0%
b. 5

Question 19

The following table provides the values of the simple price index for watches in a country.   If the base year is revised from 2006 to 2007, which of the following is the updated index for 2008?

Accepted Answer

A)  113.5 
B)  96.77 
C)  95.24 
D)  103.33 
A)  113.5 
B)  96.77 
C)  95.24 
D)  103.33

Question 20

The price of a basket of goods in 2000 was $500. If the same basket cost $600 in 2002, identify the correct statement from the following.

Accepted Answer

A)  The price index in 2002 must have been 100 points higher than in 2000. 
B)  The price increase between 2000 and 2002 was 10%. 
C)  If 2000 is considered the base year, then the price index in 2002 must have been 120. 
D)  If 2002 is considered the base year, then the price index in 2000 must have been 70. 
A)  The price index in 2002 must have been 100 points higher than in 2000. 
B)  The price increase between 2000 and 2002 was 10%. 
C)  If 2000 is considered the base year, then the price index in 2002 must have been 120. 
D)  If 2002 is considered the base year, then the price index in 2000 must have been 70.

A ________ series is obtained by adjusting the given time series for changes in prices, or inflation.

Rita Jacob purchased a corporate bond at $650 a year ago. The price of the bond has now increased to $665. A) What is Rita's capital gains yield from this investment? B) If her investment return is 7%, what coupon payment must she have received?

The following table provides the adjusted close prices of the shares of firm X for three consecutive months of the last year. a. Compute the monthly return for May. B) Compute the monthly return for June.

When the expected inflation rate is relatively low, a reasonable ________ to the Fisher equation is r = R - i.

Consider the following data on the consumer price index in a country. a. Compute the annual inflation for 2005. B) Compute the annual inflation for 2006.

The ________ rate is the percentage rate of change of a price index over time.

Index numbers provide direct comparisons of prices not only with respect to the base year, but also between non-base years.

Consider the following information about the price and the price index of a popular book over three years. What was the price index for this book in 2010?

Which of the following is the correct expression for the Laspeyres price index?

The following table shows the value of CPI for three years in a country. Which of the following is the annual inflation rate for 2004?

Which of the below is not required to compute an investment return?

If the average price for gasoline in 2001 and 2006 was $1.46 per gallon and $2.59, respectively, the simple price index for 2006 is ________%.

There is no need to have a constant base value for a price index.

The following table provides the values of the simple price index for watches in a country. If the base year is revised from 2006 to 2007, which of the following is the updated index for 2008?

The price of a basket of goods in 2000 was $500. If the same basket cost $600 in 2002, identify the correct statement from the following.

Statistics and Data

Tabular and Graphical Methods

Numerical Descriptive Measures

Introduction to Probability

Discrete Probability Distributions

Continuous Probability Distributions

Sampling and Sampling Distributions

Interval Estimation

Hypothesis Testing

Statistical Inference Concerning Two Populations

Statistical Inference Concerning Variance

Chi-Square Tests

Analysis of Variance

Regression Analysis

Inference With Regression Models

Regression Models for Nonlinear Relationships

Regression Models With Dummy Variables

Time Series and Forecasting

Nonparametric Tests

Filters

Exam 19: Returns, Index Numbers, and Inflation

A ________ series is obtained by adjusting the given time series for changes in prices, or inflation.

Rita Jacob purchased a corporate bond at $650 a year ago. The price of the bond has now increased to $665. A) What is Rita's capital gains yield from this investment? B) If her investment return is 7%, what coupon payment must she have received?

The following table provides the adjusted close prices of the shares of firm X for three consecutive months of the last year. a. Compute the monthly return for May. B) Compute the monthly return for June.

When the expected inflation rate is relatively low, a reasonable ________ to the Fisher equation is r = R - i.

Consider the following data on the consumer price index in a country. a. Compute the annual inflation for 2005. B) Compute the annual inflation for 2006.

The ________ rate is the percentage rate of change of a price index over time.

Index numbers provide direct comparisons of prices not only with respect to the base year, but also between non-base years.

Consider the following information about the price and the price index of a popular book over three years. What was the price index for this book in 2010?

Which of the following is the correct expression for the Laspeyres price index?

The following table shows the value of CPI for three years in a country. Which of the following is the annual inflation rate for 2004?

Which of the below is not required to compute an investment return?

If the average price for gasoline in 2001 and 2006 was $1.46 per gallon and $2.59, respectively, the simple price index for 2006 is ________%.

There is no need to have a constant base value for a price index.

The following table provides the values of the simple price index for watches in a country. If the base year is revised from 2006 to 2007, which of the following is the updated index for 2008?

The price of a basket of goods in 2000 was $500. If the same basket cost $600 in 2002, identify the correct statement from the following.

Statistics and Data

Tabular and Graphical Methods

Numerical Descriptive Measures

Introduction to Probability

Discrete Probability Distributions

Continuous Probability Distributions

Sampling and Sampling Distributions

Interval Estimation

Hypothesis Testing

Statistical Inference Concerning Two Populations

Statistical Inference Concerning Variance

Chi-Square Tests

Analysis of Variance

Regression Analysis

Inference With Regression Models

Regression Models for Nonlinear Relationships

Regression Models With Dummy Variables

Time Series and Forecasting

Nonparametric Tests

Filters