The Factor 1

question 20

Multiple Choice

The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table. From what table is this factor taken?

• A) Future value of 1
• B) Future value of an annuity of 1
• C) Present value of 1
• D) Present value of an annuity of 1

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Definitions:

Value-Weighted Index

An index in which each component is included in proportion to its market value, making larger companies account for a bigger portion of the index.

Divisor

A mathematical component used in indices to adjust the index value, catering for changes in stock splits or similar adjustments.

Stocks

Shares of ownership in a company, entitling the shareholder to a portion of the company's profits and assets.

Repurchase Agreements

Short-term borrowing for dealers in government securities, where the dealer sells the securities to investors usually overnight and buys them back the following day at a slightly higher price.