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LOS a, (Part 1): Compare and contrast the characteristics of, and discuss the source and direction of bias exhibited by, each of the three predominant weighting schemes used in constructing stock market indexes.
Q1. Assume a stock index consists of many firms who have recently split their stock. Which of the following weighting schemes will see a bias due to the impact of stock splits?
A) Unweighted price series.
B) Market value-weighted series.
C) Price-weighted series.
Q2. Which of the following weighting schemes will produce a downward bias on the index due to the occurrence of stock splits by firms in the index?
A) Market value-weighted series.
B) Unweighted price indicator series.
C) Price-weighted series.
Q3. Which of the following statements best describes the investment assumption used to calculate an unweighted price indicator series?
A) An equal number of shares of each stock are used in the index.
B) A proportionate market value investment is made for each stock in the index.
C) An equal dollar investment is made in each stock in the index.
Q4. In a value-weighted index firms with:
A) higher stock prices have greater impacts on the index.
B) larger market caps have lesser impacts on the index.
C) greater market caps have greater impacts on the index.
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发表于 2009-3-2 12:58
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