Stock Market Indexes

question 3

Multiple Choice

Stock market indexes:

• A)are all computed using the same methodology.
• B)all react the same to a change in the price of a particular stock.
• C)all cover the same market sectors.
• D)are all price-weighted.
• E)vary in the type of stocks included.

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Definitions:

Market Efficiency

The degree to which stock prices reflect all available, relevant information, making it impossible to consistently achieve higher returns.

Oil-company Stocks

Shares that represent ownership in companies involved in the exploration, extraction, refining, and selling of oil and oil products.

Trading Day

A Trading Day is a day on which stock exchanges are open for trading, typically excluding weekends and public holidays.

Standard Deviation

Standard deviation is a statistical measure that quantifies the amount of variation or dispersion of a set of data values.