Which of the following least describes the fundamental weighting of indices?   There may be a change in the weight of the constituent security versus its weight in a market capitalization index because the fundamental measure/ratio used to weight the assets is significantly higher or lower than its market capitalization weight. The weighting used in fundamental weighting is independent of the price of the security. The weights have to be rebalanced periodically as the fundamental attribute changes. This method has a momentum effect or bias because those stocks that increased in relative value will get even higher weights moving forward. The stocks in the index should include both “value” and “growth” stocks.

2. Stock prices and stand-alone risk Risk is the potential for an investment to generate more than one return. A security that will produce only one known return is referred to as a risk-free asset, as there is no potential for deviation from the known expected outcome. Investments that have the chance of producing more than one possible outcome are called risky assets. Risk, or potential variability in an investment's possible returns, occurs when there is uncertainty about an investment's future outcome, such as the return expected to be generated by the investment and realized by an investor. Generally, investors would prefer to invest in assets that have: O A higher-than-average expected rate of return given the perceived risk O A lower-than-average expected rate of return given the perceived risk Read the following descriptions and identify the type of risk or term being described: Description This type of risk relates to the possibility that a firm will not be able to service its…

Relative value strategies seek profits from pricing discrepancy between securities.   Select one: True False

If the weakest form of market efficiency holds, then security prices reflect all information found in past prices and volume. Thus, traditional "technical analysis" will not work. Group of answer choices True False