) THE TYPE OF INDEX THAT WOULD MOST LIKELY HELP BAYSIDE FOUNDATION ACHIEVE OBJECTIVE 1 IS A(N)

3.) The type of index that would most likely help Bayside Foundation achieve Objective 1 is

a(n):

A.

value-weighted index.

B.

price-weighted index.

C.

equal-weighted index.

Answer = A

A value-weighted index is biased toward large, mature companies and minimizes

tracking error. Furthermore, the index is self-rebalancing because the weights

automatically adjust as stock prices change, thus rebalancing costs are minimal.

“Equity Portfolio Management,” by Gary L. Gastineau, Andrew R. Olma, and Robert G.

Zielinski