The Chompers Index Is a Price Weighted Stock Index Based

question 60

Multiple Choice

The Chompers Index is a price weighted stock index based on the 3 largest fast food chains.The stock prices for the three stocks are $54,$23,and $44.What is the price weighted index value of the Chompers Index?

• A) 23.43
• B) 35.36
• C) 40.33
• D) 49.58

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Definitions:

Factor Risk

The risk associated with specific factors that can affect the returns on an investment, such as changes in interest rates, stock market volatility, or inflation.

Nonfactor Risk

Nonfactor Risk, also known as specific or idiosyncratic risk, is the part of an asset's risk that is not correlated with overall market movements and is unsystematic.

Security Market Line

A graphical representation in the Capital Asset Pricing Model that shows the relationship between the expected return of an investment and its beta, representing risk.

APT

Stands for Arbitrage Pricing Theory, a model that predicts a security's returns using the linear relationship between its expected return and macroeconomic factors.