Asked by louis rojas on Jul 09, 2024
Verified
The major concern that has been raised with respect to the weighting of countries within the EAFE index is
A) currency volatilities are not considered in the weighting.
B) cross-correlations are not considered in the weighting.
C) inflation is not represented in the weighting.
D) the weights are not proportional to the asset bases of the respective countries.
E) None of the options are correct.
EAFE Index
The Europe, Australasia, Far East index is a widely used index of non-U.S. stocks.
Weighting
The process of assigning different levels of importance or emphasis to various elements in a calculation or analysis.
- Comprehend the structure and weighting concerns of international equity indexes like EAFE.
Verified Answer
TZ
Thalia ZunigaJul 12, 2024
Final Answer :
D
Explanation :
The major concern with the EAFE index weighting is that the weights are not proportional to the asset bases of the respective countries. This can lead to misrepresentation of the economic size and market potential of the countries within the index.
Learning Objectives
- Comprehend the structure and weighting concerns of international equity indexes like EAFE.