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QUESTION 1 There are 30 stocks in the Dow Jones Industrial Index (DJIA). The stock for the Boeing Company, which is a member of the

QUESTION 1

  1. There are 30 stocks in the Dow Jones Industrial Index (DJIA). The stock for the Boeing Company, which is a member of the DJIA, increased from a close of 369.49 on Tuesday, September 10, 2019, to a close of 381.63 on September 11, 2019, for an increase of $12.14 per share (or 3.29%) on that particular day. At the same time, the DJIA increased from a close of 26,909.45 on September 10 to a close of 27035.72 on September 11, which is an increase of 126.29 points (or 0.47%). If the divisor for the DJIA is 0.145233968, how much of the increase in the DJIA is due to the increase in Boeing stock alone?

    29.51 points on the DJIA.

    83.59 points on the DJIA.

    117.33 points on the DJIA.

    885.32 points on the DJIA.

    889.48 points on the DJIA.

QUESTION 1a

  1. In class, we discussed the interest rate on sovereign debt around the world as well as in the United States. Which of the following is true regarding negative interest rates?

    While there may be some theoretical discussion regarding negative interest rates on sovereign debt, they will never occur in real life as a quote or a trade because no rational investor would ever purchase a bond with a guaranteed loss because of negative interest rates.

    Negative interest rates may be quoted for a very short time on sovereign debt, but actual trades will always have a positive interest rate.

    Negative interest rates on some international sovereign debt has existed in the world for several years, but today there are only about three major countries with negative interest rates on their sovereign debt.

    The interest rate on 10-Year U.S. Treasury bonds is currently negative, but the 30-Year bonds have a positive interest rate.

    The interest rate on both 10-Year U.S. Treasury bonds and 30-Year Treasury bonds is currently negative, which causes some economists to forecast a possible recession next year.

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