QUESTIONS 79 THROUGH 90 RELATE TO EQUITY INVESTMENTS

81. Which of the following statements is most accurate with respect to rebalancing and

reconstitution of security market indices?

A. Equal weighted indices require frequent rebalancing.

B. Turnover within an index results from a reconstitution but not from rebalancing.

C. A price-weighted index requires rebalancing more than a market-capitalization-

weighted index.

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