Both General Electric and Goldman Sachs are part of the DowJones Industrial Aver
ID: 2577825 • Letter: B
Question
Both General Electric and Goldman Sachs are part of the DowJones Industrial Average. If on a given day Goldman Sachs closes at $175 and General Electric at $25
A.
the difference in price will not affect the Average.
B.
the Average will include 7 shares of General Electric for each share of Goldman Sachs.
C.
the effect of each stock on the Average cannot be determined without knowing the number of shares outstanding for each company.
D.
the effect of changes in the price of Goldman Sachs shares will have 7 times the effect on the Average as changes in the price of General Electric.
Explanation / Answer
Anser Is D. The effect of the goldman Sachs share will have 7 times effect on the average as changes in the price of General Electric. (175/25 = 7)
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