Exercises

  1. (AACSB) Analysis
    The three most commonly used stock indices are the DJIA, the NASDAQ composite index, and the S&P 500. To create charts that compare these three indices, go to http://bigcharts.marketwatch.com to link to the BigCharts Web site and take the following steps. (Note: These steps might change if the BigCharts Web site is changed.)
    • Type in the letters "DJIA" on the top box.
    • Click on "Advanced Chart" on the top bar.

    • For time frame (left sidebar), do the following:
      • Click on "Time" and then select "1 decade"
      • Click on "Frequency" and then select "Quarterly"
    • For "Compare," go to "Index" and select "NASDAQ".

    • Chart Style
      • Click on "Price/Display" and then select "Close"
      • Click on "Chart Background" and then select "Blue and White"
      • Click on "Size" and then select "Medium"

    • Click on "Draw Chart".

    • Print out the chart using the "Printer Friendly" format option.
Repeat this process to compare the DJIA with the S&P 500. Then, answer the following questions:
a. Which two indices tend to follow similar patterns - DJIA and NASDAQ, or DJIA and S&P?
b. What accounts for this similarity? What types of companies does each index track? How many companies does each cover?
c. Which index had a large peak? What accounts for that peak?
d. Which index do you prefer for tracking the movement of the stock market? Why?

  1. (AACSB) Analysis

Below is a stock listing for P&G for November 8, 2011. This information appears daily in the Wall Street Journal and other newspapers. It's also available online on such Web sites as Yahoo! Finance.

52 WEEK HI 52 WEEK LO STOCK (SYMBOL) DIV YLD %
67.72 57.56 Procter & Gamble PG 2.10 3.30%
PE VOL 100s CLOSE NET CHG EPS
16 74,219 64.34 0.75 $3.94

To assess your ability to read and interpret this information, explain each item in the stock listing.

Back to '4.6: Financing Options'