SIE Understanding Products and Their Risks Question 96: Answer and Explanation

Question: 96

Which of the following indexes tracks the small company segment of the U.S. market?

• A. S&P 500
• B. Russell 2000
• C. Dow Jones Industrial Average (DJIA)
• D. NASDAQ

Correct Answer: B

Explanation:

B: Choice B is correct because the Russell 2000 reflects the return of 2000 of the smallest companies among the 3000 largest companies publicly trading in the U.S. Choice A is incorrect because it reflects the broad market. Choice C is incorrect because it reflects the experience of thirty large companies, who are considered to reflect the broad market. Choice D is incorrect because the NASDAQ reflects the experience of over 100 stocks of the largest American and foreign companies whose stocks trade on the NASDAQ exchange.