turnover within an index是啥意思？

问题如下：

Question Which of the following statements is most accurate with respect to rebalancing and reconstitution of security market indexes?

选项：

A.Equal-weighted indexes require frequent rebalancing. B.A price-weighted index requires rebalancing more than a market-capitalization-weighted index. C.Turnover within an index results from a reconstitution but not from rebalancing.

解释：

Solution

A is correct. After an equal-weighted index is constructed and the prices of constituent securities change, the index is no longer equally weighted. Therefore, maintaining equal weights requires frequent adjustments (rebalancing) to the index.

B is incorrect. Price-weighted indexes are not rebalanced because the weight of each constituent security is determined by its price. For market-capitalization-weighted indexes, rebalancing is less of a concern and the weights are only adjusted to reflect mergers, acquisitions, liquidations, and other corporate actions between rebalancing dates.

C is incorrect. Reconstitution is the process of changing constituent securities in the index; rebalancing refers to adjusting the weights of the constituent securities in the index. Turnover within an index results from both reconstitution and rebalancing.