- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 37. Security Market Indexes
- Subject 2. Index Construction and Management
CFA Practice Question
If you believe that one should buy and sell companies in line with their accounting figures, you should use ______ to measure the value of markets.
A. price-weighted indices
B. fundamentally weighted indices
C. float-adjusted market-capitalization-weighted indices
Explanation: A key belief behind the fundamental index methodology is that underlying corporate accounting/valuation figures are more accurate estimators of a company's intrinsic value than the listed market value of the company.
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