WorksheetsCFAI 2024 EQ M2
Total questions: 10
Worksheet time: 5mins
A security market index represents the:
risk of a security market
security market as a whole
security market, market segment, or asset class
One month after inception, the price return version and total return version of a single index (consisting of identical securities and weights) will be equal if:
market prices have not changed
capital gains are offset by capital losses
the securities do not pay dividends or interest
Security market indexes are:
constructed and managed like a portfolio of securities
simple interchangeable tools for measuring the returns of different asset classes
valued on a regular basis using the actual market prices of the constituent securities
When creating a security market index, an index provider must first determine the:
target market
appropriate weighting method
number of constituent securities
When creating a security market index, the target market:
determines the investment universe
is usually a broadly defined asset class
determines the number of securities to be included in the index
Which of the following index weighting methods requires an adjustment to the divisor after a stock split?
Price weighting
Fundamental weighting
Market-capitalization weighting
A float-adjusted market-capitalization-weighted index weights each of its constituent securities by its price and:
its trading volume
the number of its shares outstanding
the number of its shares available to the investing public
Rebalancing an index is the process of periodically adjusting the constituent:
securities’ weights to optimize investment performance
securities to maintain consistency with the target market
securities’ weights to maintain consistency with the index’s weighting
method
Security market indexes are used as:
measures of investment returns
proxies to measure unsystematic risk
benchmark for evaluating portfolio performanceproxies for specific asset classes in asset allocation models
Which of the following is an example of a style index? An index based on:
geography
economic sector
market capitalization
