Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance For Dummies

Authors: Eric Tyson

9th Edition

1119517893, 978-1119517894

More Books

Students also viewed these Finance questions

Question

Is there a clear hierarchy of points in my outline?

Answered: 1 week ago