Explanation

In an equal-weighted index with 16 stocks, each stock should have an equal weight of 1/16 = 6.25%.

From the table:

• Stock 1: 5.50% (below target weight)
• Stock 2: 6.25% (exactly at target weight)
• Stock 3: 7.00% (above target weight)

When the index is rebalanced:

1. Stock 1 (5.50%) needs to be bought to increase its weight to 6.25%
2. Stock 2 (6.25%) is already at the target weight, so its weight remains unchanged
3. Stock 3 (7.00%) needs to be sold to decrease its weight to 6.25%

Therefore, Stock 2's weight most likely remains unchanged during rebalancing.

Key Concept: In equal-weighted indices, rebalancing involves buying stocks that are below their target weight and selling stocks that are above their target weight to bring all positions back to equal weights.