Bloomberg Market Concepts
Certification
Why do companies do IPOs? - ANSIPOs incentivize entrepreneurs to innovate as IPOs provide
a way for entrepreneurs to monetize their work.
Why do company manager-owners smile when they ring the stock exchange bell at their IPO? -
ANSAn IPO reveals the value of the manager-owners' stake.
In 1999, James Glassman and Kevin Hassett published a book called "Dow 36,000". At the
time, the Dow Jones Industrial Average Index was just under 12,000. Which of the following is a
potential substitute for the book title? - ANS"The Sum of the Share Prices of All 30 Dow Jones
Members Will Triple"
What is the prime reason that Jenny's discretionary income is more volatile than her salary? -
ANSHer mortgage payments and necessities are fixed.
A luxury cell phone maker has a high fixed-cost base and a lot of debt. Which stakeholder in the
company would you rather be? - ANSa shareholder in a booming economy
What would the approximate return be on the S&P 500 from the trough of March 2009 (680) to
the end of 2013 (1,848), ignoring dividends? - ANS170%
Assume that an investor in the S&P 500 reinvests his dividends. According to the chart, what
approximate return would this investor have reaped from the early 2009 (1,000) trough to the
endpoint (3,400)? - ANS340%
Why are equities volatile? - ANSDue to the residual nature of earnings
Which of the following statements is true? - ANSWhen you buy an equity, the most you can lose
is 100% and your potential gain is unlimited.
Company A pays a dividend of 2%. Company B's stock price increases by 1% plus the inflation
rate every year. Company C pays 3% dividends, and its stock price decreases every year by
2%. Company D pays 0% dividends, and its stock price does not increase year over year. If the
companies are otherwise identical, which would you invest in? - ANSCompany B
You buy the stock of four consumer goods companies in March 2014 and hold them for five
years until March 2019. Here are the TRA charts from Bloomberg for all four stocks. The "Buy
Price" in the top left-hand corner is the price you paid for each stock. The price of the stock in
Certification
Why do companies do IPOs? - ANSIPOs incentivize entrepreneurs to innovate as IPOs provide
a way for entrepreneurs to monetize their work.
Why do company manager-owners smile when they ring the stock exchange bell at their IPO? -
ANSAn IPO reveals the value of the manager-owners' stake.
In 1999, James Glassman and Kevin Hassett published a book called "Dow 36,000". At the
time, the Dow Jones Industrial Average Index was just under 12,000. Which of the following is a
potential substitute for the book title? - ANS"The Sum of the Share Prices of All 30 Dow Jones
Members Will Triple"
What is the prime reason that Jenny's discretionary income is more volatile than her salary? -
ANSHer mortgage payments and necessities are fixed.
A luxury cell phone maker has a high fixed-cost base and a lot of debt. Which stakeholder in the
company would you rather be? - ANSa shareholder in a booming economy
What would the approximate return be on the S&P 500 from the trough of March 2009 (680) to
the end of 2013 (1,848), ignoring dividends? - ANS170%
Assume that an investor in the S&P 500 reinvests his dividends. According to the chart, what
approximate return would this investor have reaped from the early 2009 (1,000) trough to the
endpoint (3,400)? - ANS340%
Why are equities volatile? - ANSDue to the residual nature of earnings
Which of the following statements is true? - ANSWhen you buy an equity, the most you can lose
is 100% and your potential gain is unlimited.
Company A pays a dividend of 2%. Company B's stock price increases by 1% plus the inflation
rate every year. Company C pays 3% dividends, and its stock price decreases every year by
2%. Company D pays 0% dividends, and its stock price does not increase year over year. If the
companies are otherwise identical, which would you invest in? - ANSCompany B
You buy the stock of four consumer goods companies in March 2014 and hold them for five
years until March 2019. Here are the TRA charts from Bloomberg for all four stocks. The "Buy
Price" in the top left-hand corner is the price you paid for each stock. The price of the stock in
