Question 1

Studies of correlations among monthly equity price index returns have found

Accepted Answer

A)  low correlations between various U.S. equity indexes. 
B)  high correlations between various U.S. equity indexes. 
C)  high correlations between U.S. and non-U.S. equity indexes. 
D)  negative correlations between various U.S. equity indexes. 
E)  high correlations between equity and bond indexes. 
A)  low correlations between various U.S. equity indexes. 
B)  high correlations between various U.S. equity indexes. 
C)  high correlations between U.S. and non-U.S. equity indexes. 
D)  negative correlations between various U.S. equity indexes. 
E)  high correlations between equity and bond indexes. B

Question 2

Index movements are influenced by differential prices of the components in a(n)

Accepted Answer

A)  equally-weighted index. 
B)  price-weighted index. 
C)  unweighted index. 
D)  value-weighted index. 
E)  over-weighted index. 
A)  equally-weighted index. 
B)  price-weighted index. 
C)  unweighted index. 
D)  value-weighted index. 
E)  over-weighted index. B

Question 3

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. 13th if the initial index value is 100.

Accepted Answer

A)  111.54 
B)  100 
C)  102.31 
D)  123.07 
E)  143.25 
A)  111.54 
B)  100 
C)  102.31 
D)  123.07 
E)  143.25 B

Question 4

The major U.S. stock indexes are highly correlated.

Accepted Answer

A) True 
 B)False

Question 5

The Standard & Poor's International Index consists of three international, 19 national, and 38 international industry indexes.

Accepted Answer

A) True 
 B)False

Question 6

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
  
-Refer to Exhibit 4.4. Calculate the average annual rate of change for this index for the five-year period using the geometric mean.

Accepted Answer

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%

Question 7

A value weighted index automatically adjusts for stock splits.

Accepted Answer

A) True 
 B)False

Question 8

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 percentage return in the value weighted index for the period Dec 31, 2003 to Dec 31, 2004.

Accepted Answer

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

Question 9

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 price weighted series for Dec 31, 2003, after the splits.

Accepted Answer

A)  72.5 
B)  100.0 
C)  119.25 
D)  121.25 
E)  81.69 
A)  72.5 
B)  100.0 
C)  119.25 
D)  121.25 
E)  81.69

Question 10

The Morgan Stanley group index for Europe, Australia, and the Far East (EAFE) is a price weighted index.

Accepted Answer

A) True 
 B)False

Question 11

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 15th if the initial index value is 100.

Accepted Answer

A)  102.31 
B)  100 
C)  123.07 
D)  111.54 
E)  121.32 
A)  102.31 
B)  100 
C)  123.07 
D)  111.54 
E)  121.32

Question 12

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
  
-Refer to Exhibit 4.1. Assume that a stock price-weighted indicator consisted of the four issues with their prices. What are the values of the stock indicator for Day T and T + 1, and what is the percentage change?

Accepted Answer

A)  36.25, 38.75, 6.9 percent 
B)  38.75, 36.25, -6.9 percent 
C)  100, 106.9, 6.9 percent 
D)  107.48, 106.33, 1.15 percent 
E)  106.9, 100, 5.7 percent 
A)  36.25, 38.75, 6.9 percent 
B)  38.75, 36.25, -6.9 percent 
C)  100, 106.9, 6.9 percent 
D)  107.48, 106.33, 1.15 percent 
E)  106.9, 100, 5.7 percent

Question 13

Which is an example of a Style Index?

Accepted Answer

A)  small-cap growth 
B)  mid-cap value 
C)  small-cap value 
D)  mid-cap growth 
E)  All of these are correct. 
A)  small-cap growth 
B)  mid-cap value 
C)  small-cap value 
D)  mid-cap growth 
E)  All of these are correct.

Question 14

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
  
-Refer to Exhibit 4.1. 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.

Accepted Answer

A)  5.35 percent 
B)  7.48 percent 
C)  9.93 percent 
D)  6.33 percent 
E)  0 percent 
A)  5.35 percent 
B)  7.48 percent 
C)  9.93 percent 
D)  6.33 percent 
E)  0 percent

Question 15

Which of the fundamental factors was NOT used in the Fundamental Index created by Research Affiliates, Inc.?

Accepted Answer

A)  sales 
B)  profits (cash flow) 
C)  leverage (debt/equity) 
D)  net assets (book value) 
E)  dividends 
A)  sales 
B)  profits (cash flow) 
C)  leverage (debt/equity) 
D)  net assets (book value) 
E)  dividends

Question 16

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 unweighted index (geometric mean) for Dec 31, 2004. Assume a base index value of 100. The base year is Dec 31, 2003.

Accepted Answer

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

Question 17

Exchange traded funds

Accepted Answer

A)  are exactly the same as index mutual funds. 
B)  can be bought and sold like common stocks. 
C)  cannot be sold short. 
D)  have a high management fee. 
E)  cannot be timed for capital gain tax realizations. 
A)  are exactly the same as index mutual funds. 
B)  can be bought and sold like common stocks. 
C)  cannot be sold short. 
D)  have a high management fee. 
E)  cannot be timed for capital gain tax realizations.

Question 18

A bond market index is easier to create than a stock market index because the universe of bonds is much broader than that of stocks.

Accepted Answer

A) True 
 B)False

Question 19

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
  
-Refer to Exhibit 4.4. Calculate the average annual rate of change for this index for the five-year period using the arithmetic mean.

Accepted Answer

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%

Question 20

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

Accepted Answer

A)  Dow Jones Industrial Average. 
B)  Nikkei Dow Jones Average. 
C)  S & P 500 Index. 
D)  Value Line Index. 
E)  Shearson Lehman Hutton Index. 
A)  Dow Jones Industrial Average. 
B)  Nikkei Dow Jones Average. 
C)  S & P 500 Index. 
D)  Value Line Index. 
E)  Shearson Lehman Hutton Index.

Studies of correlations among monthly equity price index returns have found

Index movements are influenced by differential prices of the components in a(n)

The major U.S. stock indexes are highly correlated.

The Standard & Poor's International Index consists of three international, 19 national, and 38 international industry indexes.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.4. Calculate the average annual rate of change for this index for the five-year period using the geometric mean.

A value weighted index automatically adjusts for stock splits.

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 percentage return in the value weighted index for the period Dec 31, 2003 to Dec 31, 2004.

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 price weighted series for Dec 31, 2003, after the splits.

The Morgan Stanley group index for Europe, Australia, and the Far East (EAFE) is a price weighted index.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.1. Assume that a stock price-weighted indicator consisted of the four issues with their prices. What are the values of the stock indicator for Day T and T + 1, and what is the percentage change?

Which is an example of a Style Index?

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.1. 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.

Which of the fundamental factors was NOT used in the Fundamental Index created by Research Affiliates, Inc.?

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 unweighted index (geometric mean) for Dec 31, 2004. Assume a base index value of 100. The base year is Dec 31, 2003.

Exchange traded funds

A bond market index is easier to create than a stock market index because the universe of bonds is much broader than that of stocks.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.4. Calculate the average annual rate of change for this index for the five-year period using the arithmetic mean.

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

The Investment Setting

The Investment Setting: Part A

Asset Allocation and Security Selection

Asset Allocation and Security Selection: Part A

Organization and Functioning of Securities Markets

Efficient Capital Markets, Behavioral Finance, and Technical Analysis

An Introduction to Portfolio Management

An Introduction to Portfolio Management: Part A

An Introduction to Portfolio Management: Part B

Asset Pricing Models

Equity Valuation

The Top-Down Approach to Market, Industry, and Company Analysis

The Practice of Fundamental Investing

Equity Portfolio Management Strategies

Bond Fundamentals and Valuation

Bond Analysis and Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward, Futures, and Swap Contracts

Option Contracts

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Filters

Exam 4: Security Market Indexes and Index Funds

Studies of correlations among monthly equity price index returns have found

Index movements are influenced by differential prices of the components in a(n)

The major U.S. stock indexes are highly correlated.

The Standard & Poor's International Index consists of three international, 19 national, and 38 international industry indexes.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.4. Calculate the average annual rate of change for this index for the five-year period using the geometric mean.

A value weighted index automatically adjusts for stock splits.

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 percentage return in the value weighted index for the period Dec 31, 2003 to Dec 31, 2004.

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 price weighted series for Dec 31, 2003, after the splits.

The Morgan Stanley group index for Europe, Australia, and the Far East (EAFE) is a price weighted index.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.1. Assume that a stock price-weighted indicator consisted of the four issues with their prices. What are the values of the stock indicator for Day T and T + 1, and what is the percentage change?

Which is an example of a Style Index?

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.1. 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.

Which of the fundamental factors was NOT used in the Fundamental Index created by Research Affiliates, Inc.?

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 unweighted index (geometric mean) for Dec 31, 2004. Assume a base index value of 100. The base year is Dec 31, 2003.

Exchange traded funds

A bond market index is easier to create than a stock market index because the universe of bonds is much broader than that of stocks.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 4.4. Calculate the average annual rate of change for this index for the five-year period using the arithmetic mean.

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

The Investment Setting

The Investment Setting: Part A

Asset Allocation and Security Selection

Asset Allocation and Security Selection: Part A

Organization and Functioning of Securities Markets

Efficient Capital Markets, Behavioral Finance, and Technical Analysis

An Introduction to Portfolio Management

An Introduction to Portfolio Management: Part A

An Introduction to Portfolio Management: Part B

Asset Pricing Models

Equity Valuation

The Top-Down Approach to Market, Industry, and Company Analysis

The Practice of Fundamental Investing

Equity Portfolio Management Strategies

Bond Fundamentals and Valuation

Bond Analysis and Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward, Futures, and Swap Contracts

Option Contracts

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Filters

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 percentage return in the value weighted index for the period Dec 31, 2003 to Dec 31, 2004.

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 price weighted series for Dec 31, 2003, after the splits.

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 unweighted index (geometric mean) for Dec 31, 2004. Assume a base index value of 100. The base year is Dec 31, 2003.