Chartered Market Technician Practice Exam 2025 – Complete Prep Guide

In an unweighted index, the notable characteristic is that all stocks impact the index price equally. This means that regardless of the market capitalization or price of each individual stock, their contributions to the index’s movement are the same. This is in stark contrast to weighted indices, where larger companies can have a significantly larger impact on the overall index value compared to smaller companies.

In an unweighted index, each component stock is treated uniformly, emphasizing the principles of inclusiveness and equal representation. As a result, movements in smaller companies can have just as much effect on the index as movements in larger companies, which reflects a more diversified perspective of the market as a whole.

The other options suggest characteristics that pertain to weighted indices or interpretation errors, such as large-cap influence, selective stock inclusion, or the usage of moving averages, none of which align with the fundamental nature of an unweighted index.