The type of index in which the current values of stock are added together and divided by the value of stock on base date, is classified as __________?
Correct answer: A. value weighted index
- A. value weighted index
- B. herring weighted index
- C. primary market index
- D. stock market index
Explanation
A value-weighted index compares the total current market value of its constituent stocks with their total value on a base date. Larger companies therefore have greater influence on the index than smaller companies.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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