SCENARIO 3-11 Given below are the closing prices for the Dow Jones Industrial Average (DJIA)and the Standard & Poor's (S&P)500 Index over 10-weeks sometime in the past.
-Referring to Scenario 3-11, for the week when the DJIA is high, you will expect the index in that week to
A)be about the same value as the DJIA
B)be low
C)be high
D)have no relationship with the DJIA value

Question

SCENARIO 3-11 Given below are the closing prices for the Dow Jones Industrial Average (DJIA)and the Standard & Poor's (S&P)500 Index over 10-weeks sometime in the past. 
-Referring to Scenario 3-11, for the week when the DJIA is high, you will expect the  index in that week to
A)be about the same value as the DJIA 
B)be low 
C)be high 
D)have no relationship with the DJIA value

Quizplus · Accepted Answer

The DJIA and S&P 500 are both stock market indexes that are typically positively correlated. If the DJIA is high, it is likely that the S&P 500 will also be high, as investors tend to participate in both indexes. Therefore, we can expect the S&P 500 index to also be high during the week when the DJIA is high. Generally, the DJIA and S&P 500 have a positive correlation, meaning they tend to move in the same direction. Therefore, if the DJIA is high, it is likely that the S&P 500 will also be high in that week.

SCENARIO 3-11 Given Below Are the Closing Prices for the Dow