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Basic Question 6 of 7
______ indices are NOT rebalanced.
B. Equally weighted
C. Market-capitalization weighted
A. Price-weighted
B. Equally weighted
C. Market-capitalization weighted
User Contributed Comments 5
| User | Comment |
|---|---|
| johntan1979 | Then what's the purpose of the divisor, D? |
| geofin | to account for stocks splits, exclusions, inclusions, etc. |
| RicardoHM | +johntan1979: it is to establish it to a market index (e.g. 1000) |
| xemex131 | market-cap weighted indices are also not rebalanced because the weights are determined by price*free float shares |
| mcbreatz | I agree with market cap statement but reading gave reasons such as company mergers or removal of a stock that falls below a certain threshold. I don't really see how this is any different than a price-weighted to be honest. |
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Learning Outcome Statements
describe a security market index
calculate and interpret the value, price return, and total return of an index
CFA® 2024 Level I Curriculum, Volume 3, Module 2.