What to know
Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.
Equity Investments
Security Market Indexes practice questions
Security Market Indexes is part of CFA Level I Equity Investments. Equity Investments questions test market organization, indexes, valuation inputs, industry analysis, and equity security characteristics. Use this page to review the controlling ideas, then work through 4 questions with answer explanations and common traps.
Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.
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Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.
Review signal
Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.
Equity Investments
Security Market Indexes
An equity index begins the month at 2,500 and ends at 2,625. During the month, constituent securities paid cash distributions equivalent to 40 index points. The index's total return is closest to:
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Security Market Indexes
A price-weighted index initially contains three stocks priced at 60, 90, and 150, with divisor 3. The 150 stock then has a 3-for-1 split, and the divisor is adjusted immediately. At the next close, prices are 63, 87, and 55. The index return from immediately before the split to the next close is closest to:
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Security Market Indexes
A float-adjusted market-capitalization-weighted index has three stocks. Initial data are: A: price 20, shares 10 million, float 80%; B: price 40, shares 5 million, float 60%; C: price 30, shares 8 million, float 25%. End-of-period prices are 22, 39, and 33. The index return is closest to:
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Security Market Indexes
An index committee annually updates the list of eligible securities based on market capitalization and liquidity, and quarterly resets constituent weights to target weights without changing constituents. The annual process and quarterly process are best described, respectively, as:
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