A mutual fund invests in large-capitalization stocks.Its performance should be measured against which one of the following?
A) Russell 2000 index
B) S&P 500 index
C) Wilshire 5000 index
D) Dow Jones Industrial Average

Question

Quizplus · Accepted Answer

A mutual fund investing in large-cap stocks should be benchmarked against an index that represents large-cap stocks, and the S&P 500 index is one of the primary indices for large-cap stocks. The other options represent either small-cap stocks (Russell 2000) or a broader range of market capitalizations (Wilshire 5000). The Dow Jones Industrial Average is also not an ideal benchmark because it only tracks 30 large-cap stocks, which is too limited compared to the diversification of a mutual fund.

A Mutual Fund Invests in Large-Capitalization Stocks