Equity Investments - Equity Investments Section 1

Avatto > > CFA Level 1 > > PRACTICE QUESTIONS > > Equity Investments > > Equity Investments Section 1

51. What is most likely a feature of hedge fund indices? They:

  • Option : B
  • Explanation : Since hedge funds are not required to report their performance to any party except for the investor, therefore constituents determine the hedge fund index rather than the index providers determining the constituents.
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52. Which of the following statements regarding commodity indices is least likely correct?

  • Option : A
  • Explanation : There is no standardization with regards to commodity indices. Different indices will probably use different weighting methods. The other two statements are true.
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53. Which of the following is least likely to be an issue pertaining to a commodity index?

  • Option : C
  • Explanation : Upward bias exists only in the case of hedge funds and not in the case of commodities. The other two options are definitely issues pertaining to a commodity index.
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54. An index based on market capitalization is most likely a:

  • Option : C
  • Explanation : Style indices represent groups of securities classified according to market capitalization, value, growth, or a combination of these characteristics
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55. An example of a style index is an index based on:

  • Option : C
  • Explanation : Style indices represent groups of securities classified according to market capitalization, value, growth, or a combination of these characteristics.
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