Question: You learn that the Dow Jones Total Stock Market market value weighted
You learn that the Dow Jones Total Stock Market market-value-weighted index increased by 16 percent during a specified period, whereas a Dow Jones Total Stock Market equal-weighted index increased by 23 percent during the same period. Discuss what this difference in results implies.
Relevant QuestionsWhy is it contended that bond-market indexes are more difficult to construct and maintain than stock-market indexes?a. Calculate a Dow Jones Industrial Average for days 1 through 5.b. What effects have the splits had in determining the next day's index?Assume you want to test the EMH by comparing alternative trading rules to a buy and hold policy. Discuss the three common mistakes that can bias the results against the EMH.Describe the general goal of behavioral finance.a. Briefly explain the concept of the efficient market hypothesis (EMH) and each of its three forms-weak, semistrong, and strong-and briefly discuss the degree to which existing empirical evidence supports each of the three ...
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