Stock Market



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Stock Market

The Dow Jones Industrial Average (DJIA) is the best-known index measuring the rise and fall of the U.S. stock market. It is a weighted composite of the stock prices of 30 major companies.

The chart below, taken from a daily newspaper[1], shows the movement of the DJIA over a three-month period. Each bar represents one weekday (Monday through Friday), and dates are shown for every Monday.

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[pic] 28 4 11 18 25 2 9 16 23 30 6 13 20

March April May June

1. Identify the maximum and minimum values of the DJIA during this period, and the dates on which they occurred.

2. By what percent did the DJIA increase or decrease between the dates of April 4 and June 13?

3. In hindsight, it’s easy to recognize which were the best days to make money in the stock market. Identify the period of five business days during which the DJIA increased the most, and state the increase as a percentage. Do the same for the biggest five-day decrease in the DJIA. Which of these two events was a bigger change?

4. Suppose that someone read the chart above and made the following comment: “If I had invested in the stock market on March 28, I would have lost almost half of my money in just two days!” Explain why you would agree or disagree with this observation.

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[1]The Boston Globe, June 21, 1994, p. 40.

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