73. You decide to purchase an equal number of shares of stocks of firms to create a portfolio. If you wanted to construct an index to track your portfolio performance, your best match for your portfolio would be to construct ______. AACSB: Reflective Thinking Blooms: Understand Difficulty: 3 Hard Learning Objective: 02-02 Describe the construction of stock market indexes. Topic: Stock and Bond Market Indexes 74. In a ___________ index, changes in the value of the stock with the greatest market value will move the index value the most, everything else equal. AACSB: Reflective Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-02 Describe the construction of stock market indexes. Topic: Stock and Bond Market Indexes 75. A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pretax rate of return. An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pretax return. The after-tax return to the corporation is _______, and the after-tax return to the individual investor is _______. After-tax return to corporate investor after 70% exclusion = .06 - (.06 × .30) × .34 = 5.39% After-tax return to individual investor = .06(1 - .15) = 5.1% AACSB: Analytic Blooms: Apply Difficulty: 3 Hard
73. You decide to purchase an equal number of shares of stocks of firms to create a portfolio. If you wanted to construct an index to track your portfolio performance, your best match for your portfolio would be to construct ______. AACSB: Reflective Thinking Blooms: Understand Difficulty: 3 Hard Learning Objective: 02-02 Describe the construction of stock market indexes. Topic: Stock and Bond Market Indexes 74. In a ___________ index, changes in the value of the stock with the greatest market value will move the index value the most, everything else equal. AACSB: Reflective Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-02 Describe the construction of stock market indexes. Topic: Stock and Bond Market Indexes 75. A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pretax rate of return. An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pretax return. The after-tax return to the corporation is _______, and the after-tax return to the individual investor is _______. After-tax return to corporate investor after 70% exclusion = .06 - (.06 × .30) × .34 = 5.39% After-tax return to individual investor = .06(1 - .15) = 5.1% AACSB: Analytic Blooms: Apply Difficulty: 3 Hard
Essentials-of-Investments-9th-Edition-Bodie,-Kane,-Marcus-Test-Bank.docx