CFA Practice Question

CFA Practice Question

In an unweighted index,
A. total market value is not factored in. Only stock prices are factored in.
B. an arithmetic average is always used.
C. neither stock prices nor total market value is factored in.
Explanation: An unweighted index is one in which all stocks carry equal weight regardless of their price and market value. Such an index would be one in which an equal dollar amount was invested in each stock, regardless of the stock's price or total market value. Geometric as well as arithmetic averages of percent price changes for the stocks in the index can be used.

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