Multiple Choice Quiz


1	The fundamental value of a share of stock is
		A)	the book value of the assets divided the number of shares outstanding.
		B)	the present value of the expected price next year.
		C)	the present value of the expected future earnings per share.
		D)	the greater of a) or c)


2	If relevant interest rates increase then by the fundamentals stock values
		A)	should increase.
		B)	should decrease.
		C)	should be unaffected.
		D)	could rise or fall depending on when the expected earnings are likely to take place.


3	An initial public offering of a stock
		A)	is the only time regular people can buy stock.
		B)	is the only time that the stock markets serve to get new money to companies for .investments they wish to make.
		C)	is the most common form of stock market sale .
		D)	b) and c)


4	Stock trading for non-IPO stock
		A)	serves to equalize long and short-term interest rates.
		B)	serves to equalize high and low-risk rates-of-return.
		C)	serves to equalize risk adjusted rates-of-return.
		D)	is rare.


5	A stock market is called "efficient" by economists if
		A)	stock transactions do not take long to execute.
		B)	all information is taken into account by participants in stock markets.
		C)	commissions are low.
		D)	traders are happy with their transactions.


6	In percentage terms which index grew the most in the 1990s and fell the most in 2000 and 2001
		A)	Dow Jones Industrials
		B)	Russell 2000
		C)	Standard and Poor's 500
		D)	NASDAQ


7	In 2000 the NASDAQ peaked at
		A)	1000.
		B)	100.
		C)	10.
		D)	5000.


8	A stock market crash results from
		A)	interest rates that are perceived to be too high.
		B)	stock prices that are perceived to be significantly lower than their fundamental level.
		C)	stock prices that are perceived to be significantly higher than their fundamental level.
		D)	commission rates that are unsustainably low.


9	Which of the following stock market indexes is referred to as being "tech-heavy"
		A)	Dow Jones Industrials.
		B)	Russell 2000.
		C)	Standard and Poor's 500.
		D)	NASDAQ.


10	The NASDAQ crash of 2000 was due in large measure to
		A)	unrealistic expectations of future earnings.
		B)	much higher interest rates in 2000 than 1999.
		C)	much lower profits than had existed in 1999.
		D)	a) and b)

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