Equity Investments - Equity Investments Section 1
56. Which of the following is least likely a real estate index category?
- Option : B
- Explanation : 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.
- Option : B
- Explanation : 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.
59. Which of the following is most likely an example of a sector index?
- Option : A
- Explanation : 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.
- Option : B
- Explanation : Alpha is the difference between the return on the actively managed portfolio and the passive portfolio and is used to measure the riskadjusted return.
