If Aversa’s assessment that the component firms in his index will probably not change in the near future is CORRECT: A. there will be lower index reconstitution effects. B. there will be lower float adjustment effects. C. there will be more breadth.
This is true by definition. If the makeup of the index remains constant, then the users of the index will have lower costs in using the index as a benchmark. These costs are part of the “reconstitution effects.
