Question

Suppose that a stock index is constructed with three stocks priced at $7, $43, and $56. The number of outstanding shares for each is 500,000 shares, 405,000 shares, and 553,000 shares, respectively. Today the prices for each stock are changed to $14, $44, and $52 and the number of outstanding shares for each are changed to 250,000 shares, 405,000 shares and 553,000 shares today, what is the price weighted index value today if the index yesterday was 10,500?

Answer #1

Yesterday |
||

Stock Prices
($) |
No.of shares |
Market Value |

7 | 5,00,000 | 35,00,000 |

43 | 4,05,000 | 17,415,000 |

56 | 5,53,000 | 30,968,000 |

Total |
51,883,000 |

Today |
||

Stock Prices
($) |
No.of shares |
Market Value |

14 | 2,50,000 | 35,00,000 |

44 | 4,05,000 | 17,820,000 |

52 | 5,53,000 | 28,756,000 |

Total |
50,076,000 |

Now, yesterday when market capitalisation was $ 51,883,000,
index was 10,500. Today, market capitalisation is $ 50,076,000.
Change % = (50,076,000 - 51,883,000) / 51,883,000 * 100 = - 3.5%.
Hence, index today = 10,500 - 3.5% =
**10,132.50**.

**The price weighted index value today is
10,132.50.**

14
A benchmark index has three stocks priced at $40, $63, and $73.
The number of outstanding shares for each is 435,000 shares,
575,000 shares, and 723,000 shares, respectively. If the market
value weighted index was 950 yesterday and the prices changed to
$40, $59, and $77 today, what is the new index value?
Multiple Choice
945
950
955
940

"A benchmark index has three stocks priced at $32, $35, and $70.
The number of outstanding shares for each is 350000 shares, 405000
shares, and 553000 shares, respectively. Suppose the price of these
three stocks changed to $30, $40, and $62 and number of outstanding
shares did not change, what is the equal-weighted index
return?"
-3.65%
0.72%
-1.13%
-4.45%
question 18

An index consists of 3 stocks: A, B and C. At date 0, the prices
per share for A, B and C are $13, $60, and $15, respectively. At
date 0, the number of shares outstanding for A, B, and C are 100,
120, and 3000 respectively. At date 1, the prices per share for A,
B and C are $12, $22, and $12, respectively. At date 1, the number
of shares outstanding for A, B, and C are 100,...

Assume that we are interested in constructing a price-weighted
portfolio with three stocks: A, B and C, selling at $15, $50, and
$35 respectively. The number of shares outstanding for A, B and C
are 3, 2, and 4 millions respectively. If our initial wealth is $1
million, how many shares would you buy in each stock?
150,000; 500,000; 350,000
10,526; 7,018; 14,035
10,000; 10,000; 10,000
157,895; 350,877; 491,228

Assume that there are two stocks in the world (STOCK A and STOCK
B) as presented below:
STOCK P0 Q0 P1 Q1
A 35 200 29.75 200
B 30 100 27 100
P0 represents the price per share at time period 0 (today).
Q0 represents the number of shares outstanding at time period 0
(today).
P1 represents the price per share at time period 1 (one year
from today).
Q1 represents the number of shares outstanding at time period 1
(one year from today).
Assume that you have a total of $65...

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