Statements about the dow jones industrial average

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Reference no: EM131879463

1. Which of the following statements about the major U.S. stock market indicators is incorrect?

A. The Dow Jones Industrial Average is one of the oldest market indicators and it currently covers 30 ‘blue chip’ stocks.

B. The S&P 500 Index is a broader index covering about 500 large stocks.

C. The Nasdaq Composite Index mainly focuses on the stocks in the technology sector.

D. When the Dow Jones Industrial Average rises the S&P 500 also rises, and vice versa.

2. Which of the following statements about the Dow Jones Industrial Average (DJIA) is incorrect?

A. The DJIA is a simple average stock price, and therefore, different from most other major market indicators which are true "indexes."

B. To maintain its consistency as a price average, the DJIA has to make adjustment to its calculation whenever there is a change in stock composition or a stock split or a substantial stock dividend for its component stocks.

C. Because of numerous changes that had been made over the years, nowadays the divisor of the DJIA is artificially inflated to a very high number.

D. The DJIA has long lost its relevance as a stock price average.

Reference no: EM131879463

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