General Education Development (GED) Practice Exam

A company included in the Dow Jones Industrial Average is most likely to be what?

1. A well-known corporation with a large market capitalization

2. A foreign company

3. A start-up that was recently listed on the stock exchange

4. A small- to mid-sized technology company

The correct answer is: A well-known corporation with a large market capitalization

The correct answer highlights that a company included in the Dow Jones Industrial Average is primarily characterized as a well-known corporation with a large market capitalization. The Dow Jones Industrial Average is a stock market index that tracks 30 significant publicly traded companies in the United States, which are typically leaders in their respective industries. These companies are selected based on various criteria, including their established presence in the market, profitability, reputation, and overall impact on the economy. This choice reflects the nature of the companies typically found in this index, which are generally large, stable organizations that play a crucial role in the economic landscape. The index is not designed to represent foreign companies, as it specifically focuses on American corporations. Furthermore, start-ups or smaller tech companies are less likely to be included due to their relatively lower market capitalization and the volatility of their operations, which contrasts with the type of stability and recognition associated with the companies in the Dow.