Which of the Following Statements Is INCORRECT

question 20

Multiple Choice

Which of the following statements is INCORRECT?

• A) A stock market index is a hypothetical portfolio formed according to some criteria or rules.
• B) Most indexes,unlike total return indexes,make no adjustment for regular cash dividends.
• C) Total return indexes assume that all disbursements from the company including regular dividends get reinvested in the hypothetical index portfolio.
• D) The cost-of-carry model that has a total return index as the underlying requires dividend adjustments.
• E) The cost-of-carry model that uses indexes like the Dow Jones Industrial Average and the Standard and Poor's 500 index requires dividend adjustments.

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Definitions:

Title

The formal right of ownership of property, which may include real estate or vehicles, among others.

Possession

The act of having physical control or ownership of an object or property.

Risk of Loss

A legal term that determines who bears the cost of damage to goods during a transaction or transportation before the purchaser receives them.

Common Law

A legal system based on judicial decisions of courts and similar tribunals, rather than statutes or written laws, that serves as precedent for future cases.