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Equity Investments Q71

0. Index P is a price return index. Index T is a total return index. Both have a starting value of 1000. Both have the same underlying securities and weighting system. Six months after inception the two index values will most likely be equal if:

  • Option : C
  • Explanation : Income generated over time by underlying securities in terms of dividend or interest creates a difference between a price return index and a total return index consisting of identical securities and weights. If the securities in the index do not generate income, both indices will be identical in value.
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