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You want to purchase a security that tracks the NASDAQ. What types of securities can you...

You want to purchase a security that tracks the NASDAQ. What types of securities can you purchase to accomplish this goal? Which type of security would you purchase and why would you choose that security over your other options? Explain, using a market-available security of the type you have chosen to illustrate your points.

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Answer #1

Step - 1: NASDAQ is composition of shares of different companies. NASDAQ is an equity index. So, to track the NASDAQ, we will invest in equity of the company

Step - 2: To track the NASDAQ, we will check the composition of the Index. we will look for the sectors which have maximum weightage under NASDAQ. So, currently Technology sector holds the maximum weightage in NASDAQ. we will choose the security from the Technology sector

Step - 3: We will check which security holds the maximum weightage in the technology sector and NASDAQ. So, as per the current NASDAQ composition, Apple holds the maximum weightage in both Technology and NASDAQ

Step 4 - We will buy apple to track the NASDAQ movement.

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