A Stock Market Index Measures Price Changes of Which of the Following

question 46

Multiple Choice

A stock market index measures price changes of which of the following?

• A)a market basket of various consumer products
• B)a market basket of various products consumed by producers
• C)a market basket of stocks that are included in the index
• D)a market basket of stocks that are not included in the index

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Definitions:

Systematic Risk

The danger associated with the overall market or a specific sector of the market that cannot be mitigated by spreading investments.

Capital Asset Pricing Model

A model used to determine the theoretical rate of return of an asset, considering the asset’s risk relative to that of the market.

Beta

A measure used in finance to describe the relationship of an investment's returns with those of the market; it indicates the investment's risk compared to the market.

Rate of Return

The increase or decrease in the value of an investment throughout a certain timeframe, represented as a portion of the investment's initial cost.