Question

Which of the following indexes would best reflect the performance of the stocks of the small cap (capitalized) companies in the U.S.?

A) Russell 2000
B) S&P 500
C) Dow Jones Industrial Average
D) NASDAQ Composite

Answer 1

The Russell 2000 Index is the most suitable measure for reflecting the performance of small cap companies in the U.S., as it specifically tracks around 2000 small-cap stocks.

Step-by-step explanation:

The best index that reflects the performance of the small cap companies in the U.S. is the Russell 2000. Unlike the S&P 500, which tracks the 500 largest U.S. companies, or the Dow Jones Industrial Average that is based on 30 large U.S. industrial companies, the Russell 2000 Index measures the performance of approximately 2000 small-cap companies which are typically considered to have a smaller market capitalization. This index offers a comprehensive representation of the small-cap sector of the U.S. equity market and is often used by investors to gauge the performance of small-sized companies.