1) Which one of the following statements is correct?

		All else being equal, margin accounts always provide higher returns compared to cash accounts.
		If Fred buys $1,000 worth of stock using 60% margin, he will need to pay $600 in cash to make the purchase.
		Purchasing stocks on margin is less risky than purchasing stocks by paying cash for the entire purchase.
		None of the above.

2)

Number of shares	Closing Prices
Company	outstanding	Year T	Year T + 1
W	1,500	$22.00	$18.00
X	2,500	35.00	25.00
Y	2,000	10.00	15.00
Z	3,000	50.00	48.00

Find the percentage change of a value-weighted index consisting of these four stocks from years T to T+1. Round your final answer to four decimals and enter your answer in decimal format (EX: .XXXX)

3) Shares of stock owned by an individual but held in a brokerage firm's name for ease of trading are said to be held in street name.

True

False

4) Which of the following is a flaw of price-weighted indices?

		They cannot be adjusted for stock splits
		The effect a company has on the index is dependent primarily on its price per share.
		They are biased against high priced stocks.
		None of the abvove