Asked by Squid Neutral on May 02, 2024
Verified
If the market prices of each of the 30 stocks in the Dow Jones Industrial Average (DJIA) all change by the same percentage amount during a given day, which stock will have the greatest impact on the DJIA?
A) The stock trading at the highest dollar price per share
B) The stock having the greatest amount of debt in its capital structure
C) The stock having the greatest amount of equity in its capital structure
D) The stock having the lowest volatility
Dow Jones Industrial Average (DJIA)
An index that shows how 30 large, publicly-owned companies based in the United States have traded during a standard trading session in the stock market.
Dollar Price
The cost or value of a financial instrument or commodity expressed in terms of US dollars.
Capital Structure
The mix of debt and equity that a company uses to finance its operations and growth, crucial for determining the company's leverage and financial strategy.
- Understand the computation and modifications of principal stock indices.
Verified Answer
DC
Dessy ChristinaMay 03, 2024
Final Answer :
A
Explanation :
The DJIA is a price-weighted index, meaning that stocks with higher share prices have a greater impact on the index's movement. Therefore, the stock trading at the highest dollar price per share will have the greatest impact on the DJIA.
Learning Objectives
- Understand the computation and modifications of principal stock indices.