QUESTION 1

1. You read that the Dow Jones Industrial average closed today at 1100. Given no other information this tells you

   	a.	That the average price of the stocks in the Dow is $36.67
   	b.	That the economy is doing better today than yesterday
   	c.	That the NASDAQ composite fell
   	d.	Virtually nothing by itself

2 points

QUESTION 2

1. The market making function of dealers on NASDAQ is handled on the NYSE by

   	a.	Floor brokers
   	b.	Specialists
   	c.	Order takers
   	d.	Gremlins

2 points

QUESTION 3

1. Very often, companies selling shares to the public for the first time (IPOs) experience big run-ups in their share prices on the first day of trading. This one day return is called

   		Misvaluation
   		Pricing spread
   		Underpricing
   		Sellers curse

2 points

QUESTION 4

1. If the German nominal interest rate is 6% and the U. S. nominal rate is 5%, and real interest rates are 2% in both countries, then _______________ inflation in Germany is about _____________________ than in the U.S.

   	a.	Expected; 1% higher
   	b.	Actual; 3% higher
   	c.	Expected; 1% lower
   	d.	Actual; 4% lower

2 points

QUESTION 5

1. Increased demand for _________ causes a countrys currency to depreciate in the long run, while increased demand for its _________ causes its currency to appreciate.

   	a.	imports; imports
   	b.	imports; exports
   	c.	exports; imports
   	d.	exports; exports