One of the Most Widely Followed Stock Indexes in the United

question 13

Multiple Choice

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

• A)the stock prices of 500 large U.S. firms.
• B)an over-the-counter market.
• C)the stock prices of more than 4,000 U.S. firms.
• D)the stock prices of 30 large U.S. corporations.

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Definitions:

Cash Flow Stream

A cash flow stream is a series of cash inflows and outflows over a period of time, typically used in financial analysis to determine the value or profitability of an investment.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment’s cost.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.

Present Value

The contemporary value of a forthcoming sum of money or cash flow series, adjusted for a specific rate of return.