Question

What problems would confront a mutual fund trying to create an index fund tied to an equally weighted index of a broad stock market?

Short answer

A mutual fund trying to create an index fund would require a lot of readjustments.

Step-by-step solution

Definition

A mutual fund company pools money from investors to invest in securities such as stocks, bonds and short term debits. On the other hand, an index fund is a kind of an exchange fund that tracks the returns of a market.

Explanation

Creating an index fund tied to a stock market, would require a lot of readjustments. This would be necessitated by the fluctuating nature of stock price that would bring the fund asset allocation out of balance.