A criticism of the S&P500 used as a market index would include which one of the following statements?
A) The S&P500 is a value-weighted rather than a price-weighted index.
B) It is nearly impossible for an investor to form a portfolio that replicates the S&P500 over time.
C) Transaction costs may be effectively eliminated from the index.
D) Stocks in the Index are not replaced often enough to cause problems.

Question

Quizplus · Accepted Answer

The statement that it is nearly impossible for an investor to form a portfolio that replicates the S&P500 over time is a criticism of the index because it suggests that the index may not be representative of the overall market and may not accurately reflect the performance of a typical investor's portfolio. The other statements are not criticisms of the S&P500 as a market index.

A Criticism of the S&P500 Used as a Market Index