Why do investors believe that the S&P 500 offers a more accurate index

QUESTION

Why do investors believe that the S&P 500 offers a more accurate index of stock prices than the Dow?

A) It lists more companies.
B) It is a composite of U.S. and foreign stocks.
C) It changes the stocks listed to represent economic trends.
D) It lists stocks of all other U.S. stock market indicators.
E) It weighs prices to reflect total market value of each stock.

ANSWER

Answer: E
Explanation: E) Unlike the Dow, the S&P 500 weighs stock prices to reflect the total market value of each stock. Many investors consider this to be a more accurate method of computing an index.