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:

Suggest Alternative

The act of proposing a different option or solution than what is currently being considered.

Benefit Elimination

The process of removing certain benefits or coverage options from an insurance policy or employee benefit program.

Persuasive Message

A communication intended to influence the attitudes, beliefs, or behaviors of the recipient.

Hedging Words

Words or phrases used to soften statements, making them less direct or assertive, often to express uncertainty or politeness.