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, you will expect an increase in the DJIA to be associated with
A)an increase in the S&P 500 index
B)a decrease in the S&P 500 index
C)no predictable change in the DJIA
D)no predictable change

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, you will expect an increase in the DJIA to be associated with
A)an increase in the S&P 500 index 
B)a decrease in the S&P 500 index 
C)no predictable change in the DJIA 
D)no predictable change

Quizplus · Accepted Answer

The DJIA and S&P 500 are both stock market indices, so they are generally positively correlated. Therefore, an increase in the DJIA is likely to be associated with an increase in the S&P 500 index. The DJIA and S&P 500 index are highly correlated, therefore an increase in the DJIA is typically associated with an increase in the S&P 500 index.

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