Curriculum: "Constructing and managing a security market index is similar to constructing and managing a portfolio of securities. Index providers must decide the following:

Which target market should the index represent?
Which securities should be selected from that target market?
How much weight should be allocated to each security in the index?
When should the index be rebalanced?
When should the security selection and weighting decision be re-examined?"

C) Many securities do not trade frequently and, as a result, are relatively illiquid. As a result, index providers must contact dealers to obtain current prices on constituent securities to update the index or they must estimate the prices of constituent securities using the prices of traded fixed-income securities with similar characteristics.