Which One of the Following Is the Primary Flaw of a Price-Weighted

question 59

Multiple Choice

Which one of the following is the primary flaw of a price-weighted index?

• A)Price-weighted indexes ignore stock splits which affect stock prices.
• B)The effect a company has on the index is dependent solely on the price per share.
• C)Only a small number of stocks can be included in a price-weighted index.
• D)If the number of shares outstanding of an index stock changes, the index divisor must be recomputed.
• E)The index can only be computed once the trading day is over.

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Definitions:

Pain

An unpleasant sensory and emotional experience associated with actual or potential tissue damage or described in terms of such damage.

Self-awareness

The conscious knowledge of one's own character, feelings, motives, and desires, which can play a key role in personal development.

Self-conceptualization

The process by which an individual forms, defines, and perceives their own identity and characteristics.

Self-recognition

The ability of an individual to recognize themselves as a separate entity, often tested through the mirror test in humans and animals.