- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 2. Security Market Indexes
- Subject 2. Index Construction and Management
CFA Practice Question
An equal-weight index assumes that ______
B. each company in the index has one share outstanding.
C. there is an equal dollar amount invested in each company.
A. each company in the index has an equal number of shares.
B. each company in the index has one share outstanding.
C. there is an equal dollar amount invested in each company.
Correct Answer: C
Each stock, regardless of total market value or price, is weighted equally. It is as if there was $100 invested in each and every stock in the index. The Value Line Index is a prime example of an equal-weight index.
User Contributed Comments 1
| User | Comment |
|---|---|
| kalps | Equal weighted index - there is an equal amount invested in each company - ex Value line index |