What is our measure of the market? MWF didn't get to this so let's do some learning here want a way to track the market over time because we think market performance = health of the economy -We can't actually track the market so we use a proxy . -What's the proxy? The S&P 500 aka the value of 500 major corporations tracked over time! NASDAQ S&P 500 NYSE All of the items listed are measures of the market
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The Dow Jones Industrial Average (DJIA) and the Standard \& Poor's 500 (S\&P) indexes are used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S\&P 500 is an index composed of 500 stocks. Some say the S\&P 500 is a better measure of stock market performance because it is broader based. The closing prices for the DJIA and the S\&P 500 for 20 weeks, beginning with September $9,2005,$ follow (Barron's, January 30,2006 ). a. Develop a scatter diagram for these data with DJIA as the independent variable. b. Develop the estimated regression equation. c. Test for a significant relationship. Use $\alpha=.05$ d. Did the estimated regression equation provide a good fit? Explain. e. Suppose that the closing price for the DJIA is 11,000 . Estimate the closing price for the $\mathrm{S} \& \mathrm{P} 500$ f. Should we be concerned that the DJIA value of 11,000 used to predict the $\operatorname{S\&P} 500$ in part (e) is beyond the range of the data used to develop the estimated regression equation?
The Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 (S&P 500) indexes are used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S&P 500 is an index composed of 500 stocks. Some say the S&P 500 is a better measure of stock market performance because it is broader based. The closing price for the DJIA and the S&P 500 for 15 weeks, beginning with January 6, 2012, follow (Barron's website, April 17, 2012). Date DJIA S&P January 6 12,360 1,278 January 13 12,422 1,289 January 20 12,720 1,315 January 27 12,660 1,316 February 3 12,862 1,345 February 10 12,801 1,343 February 17 12,950 1,362 February 24 12,983 1,366 March 2 12,978 1,370 March 9 12,922 1,371 March 16 13,233 1,404 March 23 13,081 1,397 March 30 13,212 1,408 April 5 13,060 1,398 April 13 12,850 1,370 (f) Suppose that the closing price for the DJIA is 13,500. Estimate the closing price for the S&P 500. If required, round your answer to the nearest whole number. Do not round intermediate calculations.
Supreeta N.
The Standard and Poor's $500(\mathrm{S} \& \mathrm{P} 500)$ is an index composed of 500 stocks, while the Dow Jones Industrial Average is composed of 30 stocks. Many analysts feel the $S \& P 500$ is a better representation of the U.S. stock market. Do you agree? Why?
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