Bloomberg Market Concepts
Certification QUESTIONS AND
CORRECT ANSWERS
Why do companies do IPOs? - CORRECT ANSWER-IPOs 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? - CORRECT ANSWER-An 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? - CORRECT ANSWER-"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? - CORRECT ANSWER-Her 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? - CORRECT ANSWER-a 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? - CORRECT ANSWER-170%
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)? - CORRECT ANSWER-340%
Why are equities volatile? - CORRECT ANSWER-Due to the residual nature of earnings
Which of the following statements is true? - CORRECT ANSWER-When 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
Certification QUESTIONS AND
CORRECT ANSWERS
Why do companies do IPOs? - CORRECT ANSWER-IPOs 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? - CORRECT ANSWER-An 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? - CORRECT ANSWER-"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? - CORRECT ANSWER-Her 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? - CORRECT ANSWER-a 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? - CORRECT ANSWER-170%
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)? - CORRECT ANSWER-340%
Why are equities volatile? - CORRECT ANSWER-Due to the residual nature of earnings
Which of the following statements is true? - CORRECT ANSWER-When 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
