Question
How does a stock split affect a price-weighted index differently from a market-cap-weighted index?
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Answer
Price-weighted needs a divisor adjustment; market-cap-weighted does not.
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Question
What is the basic formula for an index price return between two dates?
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Answer
racP1−P0P0
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Question
Why can reconstitution create predictable trading pressure?
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Answer
Added stocks may be bought and deleted stocks sold.
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Question
Why are alternative investment indexes harder to construct than many equity indexes?
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Answer
Liquidity and pricing are often less reliable.
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