Question
Why does a total return index usually outperform a price return index over time?
Tap to flip
Answer
It includes dividends or interest reinvestment.
Tap to flip back
Question
Why is a total return index usually a better measure of investor experience than a price return index?
Tap to flip
Answer
It captures both capital gains and reinvested income.
Tap to flip back
Question
What is the role of constituent selection in index construction?
Tap to flip
Answer
It determines which securities will represent the target market.
Tap to flip back
Question
Why might float adjustment change index behavior versus full market-cap weighting?
Tap to flip
Answer
It reduces weight from shares not actually available to investors.
Tap to flip back