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In addition to price - weighted and value - weighted indexes, an equally weighted index is one in which the index value is computed from
In addition to priceweighted and valueweighted indexes, an equally weighted index is one in which the index value is computed from the average rate of return of the stocks comprising the index. Equally weighted indexes are frequently used by financial researchers to measure portfolio performance.
The following three defense stocks are to be combined into a stock index in January perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance:
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