In a Price Weighted Average Stock Market Indicator Series, the Following

question 62

Multiple Choice

In a price weighted average stock market indicator series, the following type of stock has the greatest influence:

• A) the stock with the highest price.
• B) the stock with the lowest price.
• C) the stock with the highest market capitalization.
• D) the stock with the lowest market capitalization.
• E) the stock with the highest P/E ratio.

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Definitions:

Coupon Rate

Each year, the interest rate given on a bond calculated as a percentage of its nominal value.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, expressed in years.

Interest Rate Risk

The potential for investment losses due to fluctuations in interest rates, affecting the value of interest-bearing assets.

Default Risk

The possibility that a borrower will fail to meet the obligations of a debt agreement.