Standard and Poor's also publishes the S&P Equal Weight Index, which is an equally weighted version of the S&P 500. a. To maintain a portfolio that tracks this index, what trades would need to be made in response to daily price changes? b. Is this index suitable as a market proxy? C… a. To maintain a portfolio that tracks this index, what trades would need to be made in response to daily price changes? (Select the best choice below.) O A. Hold winners and buy losers to maintain an equal investment in every stock. OB. Sell winners and buy losers to maintain an equal investment in every stock. OC. Sell winners and hold losers to maintain an equal investment in every stock. O D. Buy winners and sell losers to maintain an equal investment in every stock. b. Is this index suitable as a market proxy? (Select the best choice below.) OA. Yes, it is easy to maintain because it requires very little trading. OB. No, in aggregate investors must hold more of the larger market cap stocks, so the market portfolio cannot have an equal weight in every stock. O C. No, it is too difficult to maintain because it requires so much trading. O D. Yes, it is representative of aggregate investor behavior.
Standard and Poor's also publishes the S&P Equal Weight Index, which is an equally weighted version of the S&P 500. a. To maintain a portfolio that tracks this index, what trades would need to be made in response to daily price changes? b. Is this index suitable as a market proxy? C… a. To maintain a portfolio that tracks this index, what trades would need to be made in response to daily price changes? (Select the best choice below.) O A. Hold winners and buy losers to maintain an equal investment in every stock. OB. Sell winners and buy losers to maintain an equal investment in every stock. OC. Sell winners and hold losers to maintain an equal investment in every stock. O D. Buy winners and sell losers to maintain an equal investment in every stock. b. Is this index suitable as a market proxy? (Select the best choice below.) OA. Yes, it is easy to maintain because it requires very little trading. OB. No, in aggregate investors must hold more of the larger market cap stocks, so the market portfolio cannot have an equal weight in every stock. O C. No, it is too difficult to maintain because it requires so much trading. O D. Yes, it is representative of aggregate investor behavior.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Standard and Poor's also publishes the S&P Equal Weight Index, which is an equally weighted version of the S&P 500.
a. To maintain a portfolio that tracks this index, what trades would need to be made in response to daily price changes?
b. Is this index suitable as a market proxy?
(...)
a. To maintain a portfolio that tracks this index, what trades would need to be made in response to daily price changes? (Select the best choice below.)
O A. Hold winners and buy losers to maintain an equal investment in every stock.
O B. Sell winners and buy losers to maintain an equal investment in every stock.
O C. Sell winners and hold losers to maintain an equal investment in every stock.
O D. Buy winners and sell losers to maintain an equal investment in every stock.
b. Is this index suitable as a market proxy? (Select the best choice below.)
O A. Yes, it is easy to maintain because it requires very little trading.
O B. No, in aggregate investors must hold more of the larger market cap stocks, so the market portfolio cannot have an equal weight in every stock.
O C. No, it is too difficult to maintain because it requires so much trading.
O D. Yes, it is representative of aggregate investor behavior.
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