Equity Investments MCQ - Equity Investments Section 1

56 Which of the following is least likely a real estate index category?

Real estate index can be categorized as appraisal index, repeat sales index and real estate investment trust index. Initial sales index is not a real estate index category.

57 Tim is working on his assignment to compare equity indices with fixed income indices. From his class lecture, he recalls that
1) fixed income securities are harder to replicate
2) constituent securities of fixed-income indices are more liquid, and
3) constituent securities of fixed income indices are drawn from a larger pool as compared to securities of equity indices.
Out of the three facts he recalls, which of the following is least likely correct?

Constituent securities of fixed-income indices are generally less liquid compared to equity securities.

58 Which of the following statements is (are) least likely correct?

Statement 1: Nearly all the bond market indices are constructed using dealer prices.

Statement 2: Nearly all the bond market indices are constructed using model prices.

Statement 3: Nearly all the bond market indices are constructed using market prices.

The bond market indices are constructed using dealer prices

59 Which of the following is most likely an example of a sector index?

Sector indices focus on a specific economic sector such as health care, consumer goods, finance, energy, technology etc. on a national or global basis. Therefore, health care ETF is an example of a sector index. Wilshire 5000 is classified as a broad market index whereas a small-cap growth index is an example of a style index.

60 Which of the following statements is most likely correct?

Statement 1: Alpha is used to measure the market sentiment.

Statement 2: Alpha is the difference between the return on the actively managed portfolio and the passive portfolio.

Statement 3: Alpha is the systematic risk of a security, using index as a proxy for the entire market.

Alpha is the difference between the return on the actively managed portfolio and the passive portfolio and is used to measure the riskadjusted return.