The major concern that has been raised with respect to the weighting of countries within the EAFE index is
A) currency volatilities are not considered in the weighting.
B) cross-correlations are not considered in the weighting.
C) inflation is not represented in the weighting.
D) the weights are not proportional to the asset bases of the respective countries.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The major concern with the EAFE index weighting is that the weights are not proportional to the asset bases of the respective countries. This can lead to misrepresentation of the economic size and market potential of the countries within the index.

The Major Concern That Has Been Raised with Respect to the Weighting