An Index Is Valued on a Daily Basis

question 34

Multiple Choice

An index is valued on a daily basis. However, some stocks in this particular index have not traded recently. As a result, this index suffers from index:

• A)fatigue.
• B)devaluation.
• C)flatness.
• D)staleness.
• E)weighting.

---

Definitions:

Stock Splits

An action by a company to divide its existing shares into multiple shares to boost the liquidity of the shares.

Retained Earnings

The portion of a company's profits that is held or retained and not paid out as dividends to shareholders, often used for reinvestment in the business or to pay off debt.

Dividend-Related Liability

A financial obligation arising when a company declares dividends payable to shareholders, to be settled on the dividend payment date.

Stock Dividends Distributable

A portion of a company's earnings decided by the board of directors to be distributed to its shareholders in the form of additional shares.