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Consider the following statements regarding the Morgan Stanley Capital International (MSCI) Index:
  1. It facilitates the construction and monitoring of portfolios in a cohesive and complete manner.
  2. The Rural Electrification Corporation Limited has secured a place in this Index.
Which of the statements given above is/are correct?
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements regarding the Morgan Stanley Capital...
Rural Electrification Corporation Limited under the Ministry of Power, has secured a coveted place in the esteemed Morgan Stanley Capital International (MSCI) Global Standard Index, effective from 1st September 2023.
  • It is owned by the multinational investment management and financial services company Morgan Stanley.
  • It is an investment research firm that provides stock indexes, portfolio risk and performance analytics, and governance tools to institutional investors and hedge funds.
  • It is a leading provider of critical decision support tools, including stock indexes, and services for the global investment community.
  • MSCI indices facilitate the construction and monitoring of portfolios in a cohesive and complete manner, avoiding benchmark misfit. It has over 160,000 indices in its portfolio.
  • MSCI has indexes for countries, regions, emerging markets, developed markets, small cap, all cap and even Islamic indexes.
  • It selects stocks for its equity indexes that are easily traded and have high liquidity, with companies having high free float getting more weightage.
  • It prefers stocks that have active investor participation, and are without owner restrictions.
Hence both statements are correct.
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Community Answer
Consider the following statements regarding the Morgan Stanley Capital...
The correct answer is option 'C' - Both 1 and 2.

Explanation:

The Morgan Stanley Capital International (MSCI) Index is a widely recognized benchmark index that measures the performance of equity markets in various regions and countries around the world. It is used by investors, portfolio managers, and financial institutions to gauge the performance of their investments and to construct and monitor portfolios.

Let's examine each statement in detail:

1. It facilitates the construction and monitoring of portfolios in a cohesive and complete manner.
- This statement is correct. The MSCI Index provides a comprehensive and cohesive framework for constructing and monitoring portfolios. It includes a broad range of companies from different sectors and industries, allowing investors to diversify their investments and track the overall performance of the market.

2. The Rural Electrification Corporation Limited has secured a place in this Index.
- This statement is also correct. The Rural Electrification Corporation Limited (REC) is a public sector company in India that provides financial assistance for rural electrification projects. REC has been included in the MSCI India Index, which is a subset of the MSCI Emerging Markets Index. The MSCI India Index represents the performance of the Indian equity market and includes companies from various sectors, including REC.

Based on the above explanations, both statements are correct, and the correct answer is option 'C' - Both 1 and 2.
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