Question

A provider of an index fund most likely uses a sampling replication procedure to track the index in order to

Answer 1

Answer:

A provider of an index fund most likely uses a sampling replication procedure to track the index in order to:

reduce transaction costs.

Explanation:

The reduction of transaction costs is at the core with index fund providers.  An index fund is described as a mutual fund or an exchange-traded fund (ETF).  The portfolio of the index fund is constructed to match or track the components of a financial market index, for example, the S&P 500 index.   It has been noted that these funds follow their benchmark index without regard to the state of the exchange market.

Answer 2

Reason why sampling replication procedure is been utilized by provider of an index when tracking the index is to : reduce transaction costs.

• An index fund can be regarded as investment that are responsible for tracking of a market index.

• This index contains stocks or bonds. However, when carrying out this tracking sampling replication procedure are usually preferred by them because it saves their money, it reduces cost .

Learn more at:

https://brainly.com/question/2804420?referrer=searchResults