A Market-Value Index

question 9

Multiple Choice

A market-value index

• A)is calculated such that the proportion of the index a stock represents is determined by its proportion of the total market capitalization of all stocks in the index.
• B)is calculated as the average price of all the stocks in the index that trade that day, one example is the NASDAQ.
• C)is calculated like the DJIA.
• D)none of the above

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Definitions:

Holding-Period Return

The return on an investment over the period it is held.

Dividend

A portion of a company's earnings that is paid to shareholders, usually on a quarterly basis.

Nominal Rate of Interest

The rate of interest before adjustments for inflation, reflecting the face-value rate of interest paid on a loan or received from an investment.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time.