The Dow Jones Industrial Average gets the most attention from the mainstream press
Large drops or increases in the average, or achieving numerical milestones, are often big news stories. So why do industry professionals and educated investors feel the Dow doesn't accurately represent the market?
What will be an ideal response?
Answer: The Dow only indexes the average prices of stocks of 30 large corporations. Other indicators, such as the S&P 500, track hundreds or thousands of stocks.
Explanation: The Dow is an index of the average of prices of stocks for 30 large corporations; it offers a general measure of the movement of U.S. stock prices. By comparison, the Wilshire 5000 index tracks about 6,500 stocks.
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The NPV of an investment made today is $10,000. If postponed for one year, the NPV at that time will increase by $1,000. Which of the following is correct if the opportunity cost of the investment is 12 percent?
A) postpone; the NPV will be larger. B) postpone; the NPV increases by a positive amount. C) invest now; always accept positive NPV projects. D) invest now; NPV does not grow at a sufficient rate.
Getting a position in China is not easy
Indicate whether the statement is true or false.