Which of the following is least likely a challenge in constructing a fixed-income index?

A. Lack of liquidity
B. Large size of the investment universe.
C. Difficulty estimating future interest payments.

Correct Answer: C

A and B are challenges. Fixed-income index managers often struggle with a low amount of liquidity and a high number of securities.

Another challenge is estimating current value for illiquid fixed-income securities, but estimating future interest payments is not a necessary step or challenge in constructing a fixed-income index.