In a ________ index, changes in the value of the stock with the greatest market value will move the index value the most, everything else equal.
A) value-weighted index
B) equally weighted index
C) price-weighted index
D) bond price index

Question

Quizplus · Accepted Answer

In a value-weighted index (also known as a market capitalization-weighted index), the impact of a stock on the index is proportional to its market value (price times shares outstanding). Therefore, stocks with a higher market value have a greater impact on the index's movements.

In a ________ Index, Changes in the Value of the Stock