The Standard amp; Poor's 500 Index differs from the DJIA in at least two major respects. What are the two major differences?
What will be an ideal response?
The S&P 500 Index differs from the DJIA in (1) that the S&P 500 is constructed from the 500 largest firms in the U.S. economy, where the DJIA uses 30 of the largest firms. Also, (2) the S&P is a value-weighted index, meaning it reflects the total value of owning the entirety of the 500 firms. By contrast, in the DJIA the higher priced stocks carry more weight because it is a price-weighted average. The S&P 500 gives more weight to the larger firms than the DJIA does.
You might also like to view...
A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972. A college graduate in 2005 found a job paying $30,000. The CPI was 1.68 in 2005. The 1972 graduate's job paid ________ in nominal terms and ________ in real terms than the 2005 graduate's job.
A. more; more B. more; less C. less; more D. less, less
A tax that is imposed on an imported good is called a
A) tariff. B) quota. C) government license. D) patent.
A firm's isoprofit curve is defined as the combinations of outputs produced by:
A. all firms that yield the firm the same level of profit. B. all firms that make total industry profits constant. C. a firm that earns it the same level of profits. D. None of the answers is correct.
The classical economists argued that planned saving and planned investment will always be equal because of changes in
A. wages. B. the price level. C. the interest rate. D. the level of real disposable income.