Question

On March 1, 2008, the S&P 500 index was at 757.13. a) What is the S&P...

On March 1, 2008, the S&P 500 index was at 757.13.

a) What is the S&P 500 index?

b) Where is the S&P 500 index today (any date in April 2018 is fine)?

c) If you had used $10,000 to purchase stocks that have changed in value by the same percentage as the S&P 500 index, how much would you have today? Please show your work.

d) What impact do you think, this change in the S&P 500 index since March 1, 2008 has had on the macroeconomy (hint: think wealth effect).

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Homework Answers

Answer #1

Part A

S&P 500 is an American stock market index which is based on the market capitalization of 500 large companies which have common stock listed on the NYSE or NASDAQ.

Part B

On April 27, 2018, at 4:00 PM the S&P 500 index was on 2669.93.

Part C

Percentage change

(2669.93/757.13)-1

= 2.5264*100

= 252.64

So, today we have

10000(1+252.64) = 2536400

Part D

This change would make the wealth effect on the macroeconomy. The wealth effect is a principle that the worth of portfolio increases because of increasing prices of stock. Investors feel more relax and protected about their wealth with this change

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