Final answer:
An investment advisory firm that tracks its performance against the S&P 400 focuses on mid-cap securities. The S&P 400 serves as a gauge for mid-size companies with market capitalizations typically ranging from $2 billion to $10 billion, which differs from the S&P 500's large-cap focus or the Nasdaq's tech-heavy listings. Option a.
Step-by-step explanation:
If an investment advisory firm tracks its performance against the S&P 400, it would indicate that the firm concentrates on mid-cap securities. The S&P 400, also known as the S&P MidCap 400 Index, is designed to provide investors with a benchmark for mid-size companies. Unlike the S&P 500, which includes a wider range of large-cap companies, the S&P 400 focuses on a segment of the market that exhibits both growth and value characteristics, consisting of mid-capitalization companies in the United States. These are firms with market capitalizations typically between $2 billion and $10 billion. Tracking performance against the S&P 400 suggests that the investment firm is focused on this mid-cap segment of the market.
It is also essential to differentiate from the Dow Jones Industrial Average, which is a price-weighted index of 30 large-cap industrial stocks, and the Nasdaq stock market, which includes a large number of technology stocks and covers companies of various sizes. Therefore, when the investment advisory firm benchmarks against the S&P 400, it is not comparing its performance with large-cap industrials or the broad technology sector but rather with mid-sized companies that may provide a different risk/return profile.