Question

Question 10 (3 points)

Active mutual funds historically outperform passive mutual funds.

Question 10 options:

	a) True
	b) False

The NASDAQ:

Question 5 options:

	a) weights individual stocks equally.
	b) gives greater weight to larger stocks than does the Dow.
	c) gives greater weight to high-tech stocks than does the Dow.
	d) has 30 stocks.

Popular U.S. stock indexes include:
I. FDIC
II. Dow Jones Industrial Average
III. NASDAQ

Question 15 options:

	a) I and II only
	b) I and III only
	c) II and III only
	d) I, II, and III

Financial returns on houses are _______ over long periods of time because part of the return on housing is from ________.

Question 16 options:

	a) close to zero; the joys of ownership
	b) about 7% per year; homeowner improvements
	c) about 12% per year; paying low property taxes
	d) negative; depreciation

Consider the market for ABC Company's stock. What should happen in this market after an announcement that the company is having financial difficulties?

Question 24 options:

	a) The demand for the stock would shift to the left.
	b) The demand for the stock would shift to the right.
	c) The supply of the stock would shift to the left.
	d) The supply of the stock would shift to the right.

Answer 1

question 10

False.

Passive mutual funds tend to outperform the actively managed mutual funds. For active managers to outperform the market, they have to achieve a return that can overcome their fund expenses, which are much higher than passive funds due to higher management fees, higher trading costs, and higher turnover.

question 5

b)

NASDAQ gives more weightage to larger stocks than dow because Nasdaq is market capitalized index while DOW is price-weighted.

question 15

c)

nasdaq and dow jones industrial average are popular stock index while FDIC is federal deposit insurance corporation is an agency only.

Question 16

a) close to zero because the primary benefit is from the joy of ownership

question 24

a) the demand would shift to left because due to the negative news the demand for the security shall fall.