Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 4 of 14
A price-weighted index gives the ______.
B. lowest-price stock more impact on the movement of the index
C. highest percentage change more impact on the movement of the index
A. highest-price stock more impact on the movement of the index
B. lowest-price stock more impact on the movement of the index
C. highest percentage change more impact on the movement of the index
User Contributed Comments 3
| User | Comment |
|---|---|
| kalps | DJIA is a price weighted index which looks negatively at stock splits |
| jasonkwk | what do u mean by looks negatively? |
| mcbreatz | A stock split will reduce the price of a stock by half so now that stock has less impact on the index. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
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® 2024 Level I Curriculum, Volume 3, Module 2.