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Basic Question 7 of 14
A(n) ______ index assumes that an investor purchases an equal number of shares for each stock in the index.
B. equally weighted
C. market-capitalization-weighted
A. price-weighted
B. equally weighted
C. market-capitalization-weighted
User Contributed Comments 4
| User | Comment |
|---|---|
| johntan1979 | Equal dollar amount: Equally weighted Equal # shares: Price weighted |
| RicardoHM | Correct, that's a nice clean way to look at it. Thanks |
| khalifa92 | if equal amount of shares how do high price dominates the index? |
| mcbreatz | 1 share worth $15 will have more impact then 1 share worth $10. |
I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt
Learning Outcome Statements
describe the choices and issues in index construction and management
compare the different weighting methods used in index construction
calculate and analyze the value and return of an index given its weighting method
describe rebalancing and reconstitution of an index
CFA® 2025 Level I Curriculum, Volume 3, Module 2.