Because the Dow Jones Index Average Is Based on the Movement

question 139

Multiple Choice

Because the Dow Jones Index Average is based on the movement of only ________ large,well-established stocks,many investors believe it reflects price movements for large firms rather than for the general market.

• A)30
• B)50
• C)100
• D)500

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Definitions:

Open-Market Operations

The purchase or sale of Treasury securities by the Federal Reserve; main monetary policy weapon.

Theories Of Expectations

Various economic theories that attempt to predict how rational individuals form their expectations about future events, affecting their economic decisions.

Adaptive Expectations Theory

An economic theory that proposes individuals adjust their expectations for the future based on recent past experiences and events.

Certainty Equivalent Theory

An economic theory that quantifies how much risk an investor is willing to take on, expressed as the minimum guaranteed amount an investor would accept rather than take a gamble.