FIN 411 Quiz #1: April 9, 1997


1. (10 points)

Recently, the stock market has been moving in large jumps. The table below shows the 25 largest one day changes in the Dow Jones Industrial Average between 1928-97. You can see that 12 of the 25 largest drops in modern history have occurred in the last 15 months. Likewise, 15 out of the 25 largest increases in modern history have occurred in the last 15 months.

Largest Daily Changes in the DJIA, 1928-97
Rank Date DJ Change % Change Date DJ Change % Change
1 10/19/87 1738.74 -508.00 -22.61% 10/21/87 2027.85 186.84 10.15%
2 10/13/89 2569.26 -190.58 -6.91% 12/19/96 6473.64 126.87 2.00%
3 3/8/96 5470.45 -171.24 -3.04% 1/17/91 2623.51 114.60 4.57%
4 7/15/96 5349.51 -161.05 -2.92% 3/11/96 5581.00 110.55 2.02%
5 3/13/97 6878.89 -160.48 -2.28% 2/12/97 6961.63 103.52 1.51%
6 3/31/97 6583.48 -157.11 -2.33% 10/20/87 1841.01 102.27 5.88%
7 10/26/87 1793.93 -156.83 -8.04% 1/3/97 6544.09 101.60 1.58%
8 1/8/88 1911.31 -140.58 -6.85% 3/24/97 6905.25 100.46 1.48%
9 3/27/97 6740.59 -140.11 -2.04% 3/18/96 5683.60 98.63 1.77%
10 11/15/91 2943.20 -120.31 -3.93% 11/6/96 6177.71 96.53 1.59%
11 7/5/96 5588.14 -114.88 -2.01% 3/5/97 6945.85 93.13 1.36%
12 10/16/87 2246.74 -108.35 -4.60% 2/22/96 5608.46 92.49 1.68%
13 12/18/95 5075.21 -101.52 -1.96% 10/29/87 1938.33 91.51 4.96%
14 4/14/88 2005.64 -101.46 -4.82% 10/16/89 2657.38 88.12 3.43%
15 12/31/96 6448.27 -101.10 -1.54% 8/21/91 3001.79 88.10 3.02%
16 12/12/96 6303.71 -98.81 -1.54% 12/23/91 3022.58 88.10 3.00%
17 1/10/96 5032.94 -97.19 -1.89% 7/18/96 5464.18 87.30 1.62%
18 2/4/94 3871.40 -96.30 -2.43% 5/31/95 4465.14 86.46 1.97%
19 10/14/87 2412.70 -95.46 -3.81% 8/2/96 5679.83 85.08 1.52%
20 1/23/97 6755.75 -94.28 -1.38% 1/29/97 6740.74 84.66 1.27%
21 4/2/97 6517.01 -94.04 -1.42% 1/30/97 6823.86 83.12 1.23%
22 8/6/90 2716.34 -93.31 -3.32% 2/7/97 6855.80 82.74 1.22%
23 2/20/97 6927.38 -92.75 -1.32% 4/5/94 3675.41 82.06 2.28%
24 10/6/87 2548.63 -91.55 -3.47% 12/9/96 6463.94 82.00 1.28%
25 11/22/94 3677.99 -91.52 -2.43% 8/27/90 2611.63 78.71 3.11%

A friend, parent, or colleague has been reading the business press and is concerned about the abnormally high volatility of the US stock market. What do you tell him/her? Suppose that someone asked for your recommendation about how to fix this problem? What would you say?
A full-text version of this quiz is available in Acrobat's portable data format (.pdf). The file is about 72K and can only be viewed (and printed) using a copy of Acrobat Reader.

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Click here to download this quiz.


Click here to see the histogram showing the grades for this quiz.

A histogram showing the grades for this quiz is available in Acrobat's portable data format (.pdf). The file is about 34K and can only be viewed (and printed) using a copy of Acrobat Reader.

Click here to download this graph.


A table showing the largest percentage changes in the Dow Jones Industrial Average from 1928-97 is available here.

A table showing the largest changes in the Standard & Poor's 500 Index from 1928-97 is available here.

A table showing the largest percentage changes in the Standard & Poor's 500 Index from 1928-97 is available here.


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Last Updated on 4/16/97

© Copyright 1997, G. William Schwert