Which One of the Following Statements Related to Stock Indexes

question 79

Multiple Choice

Which one of the following statements related to stock indexes is correct?

• A)The index divisor increases in value whenever a stock in the index undergoes a stock split.
• B)A value-weighted index includes both dividends and capital gains.
• C)The S&P 500 index is value-weighted.
• D)The DJIA is value-weighted.
• E)Index staleness is more apt to be a problem for the DJIA than for the Wilshire 5000.

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Definitions:

Crowding-out Effect

A situation where increased government spending leads to a reduction in private sector spending, either through higher taxes, higher interest rates, or borrowing.

Crowding-out Effect

A situation where increased government spending leads to a reduction in private sector investment.

Multiplier Effect

An economic phenomenon where an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

Aggregate Demand

The aggregate market demand for goods and services in an economic environment, valued at a specific price level within a certain timeframe.