What is the primary criticism leveled against the weighted market capitalization method of stock selection?

"It unfairly favors small-cap stocks, leading to market volatility." "It results in an over-concentration of a few stocks, neglecting smaller companies." "It fails to consider the historical performance of companies, leading to poor diversification." "It prioritizes momentum-based investing over value investing, increasing risk."

How do equal-weight index funds address the limitations of market-cap-weighted funds?

"By allocating funds based on the past performance of companies, ensuring consistent returns." "By investing an equal amount of money in each stock within the fund, regardless of company size." "By focusing on high-growth startups, capitalizing on emerging market trends." "By excluding large-cap stocks to promote the growth of small and medium enterprises."

What is the core principle behind equal-weight index funds?

"Market-cap-weighted allocation is the most effective strategy for maximizing returns." "Historical performance is the primary indicator of future stock performance." "Weighted market cap allocation does not guarantee returns, and diversification is crucial." "Momentum-based investing is superior to value investing for long-term growth."

Which of the following is a key advantage of equal-weight index funds?

"They minimize transaction costs, leading to lower expense ratios." "They offer increased stability in volatile markets due to their focus on blue-chip stocks." "They promote true diversification by spreading risk equally across all constituents." "They prioritize momentum-driven investing, capitalizing on short-term market trends."

What potential drawback is associated with equal-weight index funds?

"They may underperform in volatile markets compared to funds with a higher concentration of blue-chip stocks." "They tend to have lower expense ratios due to reduced transaction costs." "They overemphasize large-cap stocks, leading to a lack of diversification." "They fail to adapt to stock splits and mergers, leading to imbalanced allocations."