Which of the Following Limits the Usefulness of the S&P

question 54

Multiple Choice

Which of the following limits the usefulness of the S&P 500 Index as a market benchmark?

• A) It is too weighted with NYSE stocks to be representative.
• B) It is too to calculate for the average investor.
• C) Its use of a base year in its calculations affects its performance.
• D) Its performance can be greatly affected by a small number of stocks.

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Definitions:

Petty Cash

A limited fund held in reserve to facilitate the prompt settlement of minor sundry outlays.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value.

Bank Certificates

Short for "bank certificates of deposit (CDs)," which are time-deposit financial products offered by banks with fixed interest rates and maturity dates.

Money Market Funds

Investment funds that invest in short-term debt securities, offering high liquidity with a relatively low level of risk.