The most broadly based index that uses a broad base of stocks in its portfolio and can give an investor a good indication of how the overall stock market has performed in a given day is called the: Dow Jones Industrial Average Standard & Poor's 500 Russell 2000 Index Wilshire 5000 Use of the dividend discount model (DDM) and the discounted cash flow model (DCF) are examples of which type of stock valuation? relative absolute comparative analysis intrinsic value
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The correct answer is the Wilshire 5000 Index. This index includes all actively traded stocks in the United States, providing a comprehensive view of the market. Show more…
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The following stocks make up the Dow Jones Industrial Average (Barron’s, March 23, 2009): 1. 3M 2. AT&T 3. Alcoa 4. American Express 5. Bank of America 6. Boeing 7. Caterpillar 8. Chevron 9. Cisco Systems 10. Coca-Cola 11. Disney 12. DuPont 13. ExxonMobil 14. General Electric 15. Hewlett-Packard 16. Home Depot 17. IBM 18. Intel 19. Johnson & Johnson 20. Kraft Foods 21. McDonald’s 22. Merck 23. Microsoft 24. J.P. Morgan 25. Pfizer 26. Procter & Gamble 27. Travelers 28. United Technologies 29. Verizon 30. Wal-Mart Suppose you would like to select a sample of six of these companies to conduct an in-depth study of management practices. Use the first two digits in each row of the ninth column of Table below to select a simple random sample of six companies.
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Stocks may be categorized by industry. The data on the following page represent the 5 -year rates of return (in percent) for a sample of consumer goods stocks and energy stocks ending November 10,2010 . (a) Determine the mean and the median rate of return for each industry. Which sector has the higher mean rate of return? Which sector has the higher median rate of return? (b) Determine the standard deviation for each industry. In finance, the standard deviation rate of return is called risk. Typically, an investor "pays" for a higher return by accepting more risk. Is the investor paying for higher returns in this instance? Do you think the higher returns are worth the cost?
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The Dow Jones Industrial Average (DJIA) and the Standard \& Poor's 500 Index (S\&P 500$)$ . are both used to measure the performance of the stock market. The DJIA is based on the price of stocks for 30 large companies; the S\&P 500 is based on the price of stocks for 5000 companies. If both the DJIA and S\&P 500 measure the performance of the stock market, how are they correlated? The following data show the daily percent increase or daily percent decrease in the DJIA and S\&P 500 for a sample of nine days over a three-month period (The Wall Street Journal, January 15 to March $10,2006 )$ a. Show a scatter diagram. b. Compute the sample correlation coefficient for these data. c. Discuss the association between the DJIA and S\&P 500. Do you need to check both before having a general idea about the daily stock market performance?
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