Lai Zen constructed an index containing three different assets: Wheel, Lever, and Pulley. She invested $2,500 for each asset and decided that equal-weighting will be used. What is the return on the index if the beginning and ending prices of the stock are the following?

Security	Beginning Price	Ending Price
Wheel	100.00	105.00
Lever	80.00	75.00
Pulley	125.00	132.00

What is the return on the index?

Daily Average Index is an index containing three assets: Dawn, Dusk, and Twilight. What is the price return of the index if market-capitalization weighting is employed in the index?

Security	Price, Beginning	Price, Ending	Shares Outstanding	Total Dividends
Dawn	74	80	1,250	2.00
Dusk	74	67	3,250	5.00
Twilight	74	87	2,000	0.00

John Smith, CFA, wants to know the price return of the index in a year. He gathers the following information:

Security	Beg, Price	End, Price	Shares
AX1	56	48	800
BY2	58	64	1,300
CZ3	31	32	500

What is the price return of the index?

Which of the following statements regarding security market indices is true?

	a.	A price return index reflects only the prices of the securities of the index.
	b.	The total return index always exceeds the price return index.
	c.	A geometric return for an index with returns on periods 1 and 2 as 4% and 3.5% is 3.75%.

Marshall Co. expects to pay $2 dividends for every $8 in its net income. Marshall Co. posted a net income of $500,000, total assets of $8,000,000, and total liabilities of $5,500,000. Calculate the sustainable growth rate.

In a market that is not operationally efficient, which of the following would come least in a rational investor's priority of willingness to pay?

	a.	Asset's current price
	b.	Fundamental value
	c.	Intrinsic valuation

What is the total return on Chemical Index given that is uses equal-weighting on its index?

Security	Price, Beginning	Price, Ending	Total Dividends
Xenon	29.60	43.33	4.50
Ytterbium	59.20	68.78	11.25
Zirconium	66.60	81.45	9.75

Semistrong market efficiency is described in all of the following except:

	a.	In a semistrong market, efforts to analyze financial market and financial statement data are futile.
	b.	An investor cannot achieve positive risk-adjusted returns on averages using fundamental analysis.
	c.	Higher growth than expected earnings announced by a company, results in an increase in the price of the shares weeks after such announcement.

Litt Inc. sells specialty ice cream. Because of the change in consumer preference and development of substitutes such as gelato, the specialty ice cream industry currently experiences negative growth. Firms are either consolidating, merging, or exiting the market, resulting to price reduction. Which stage of the industry life cycle is Litt Company most likely in?

	a.	Shakeout
	b.	Mature
	c.	Decline

Consider the prices of the stock that Peter Belch, manager of the index fund:

Company X	$ 50
Company Y	$ 74
Company Z	$ 86

Peter Belch maintains a price-weighting for its index. What is the new index denominator if Company Z announced a stock split of 4-for-1?

Which of Porters five forces is one of the two factors to be analyzed first?

	a.	Threat of new entrants
	b.	Threat of substitution
	c.	Bargaining power of consumers