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Security market indexes and market efficiency

Equity investments / equities · Lesson 2 of 5

Lesson 2 of 5

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Lesson 2 of 5 · Equity investments / equities

Security market indexes and market efficiency

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Calculate and compare index values and returns for price-weighted, equal-weighted, market-capitalization-weighted, and fundamentally weighted indexes.
Explain index construction choices, including constituent selection, weighting, rebalancing, and reconstitution, and assess how those choices affect index characteristics and performance.

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Explain the weak-form, semi-strong-form, and strong-form versions of market efficiency and identify the implications of each for security analysis and portfolio management.

Discuss market anomalies, behavioral challenges, and limits to arbitrage, and evaluate how they qualify the practical application of the efficient market hypothesis.

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