Question

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 to invest on P0.

23) If your portfolio is an EQUALLY-WEIGHTED INDEX of the two stocks, how many shares of STOCK B do you buy? (YOU CAN BUY A FRACTION OF A SHARE)

A. 1

B. 100

C. .9986

D. 1.083

E. None of the above (Put the correct answer next to the letter E on the answer sheet.)

24) Which stock, if any, carries more weight when calculating the rate of return using the PRICE-WEIGHTED AVERAGE method?

A. STOCK A

B. STOCK B

Answer #2

Q - 23

Equally weighted index. Hence, an equal amount = 65 / 2 = 32.5 should be invested in each stock.

Hence, number of shares of STOCK B you buy = 32.5 / P0 = 32.5 / 30 = 1.083

Hence, the correct answer is the option D. 1.083

Q - 24

In price weighted average method, a stock with a higher price gets higher weight than a stock with a lower price. Stock A has higher P0 and P1 than B. Hence, it should get higher weight.

Hence, the correct answer is the option A. STOCK A

answered by: anonymous

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last
period.
P0
Q0
P1
Q1
P2
Q2
A
97
100
102
100
102
100
B
57
200
52
200
52
200
C
114
200
124
200
62
400
a. Calculate the rate of return on a
price-weighted index of the three stocks for the first period
(t = 0 to t...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last period.
P0
Q0
P1
Q1
P2
Q2
A
90
100
95
100
95
100
B
50
200
45
200
45
200
C
100
200
110
200
55
400
Calculate the first-period rates of return on the following
indexes of the three stocks: (Do not round intermediate
calculations. Round answers to 2...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last period.
P0
Q0
P1
Q1
P2
Q2
A
90
100
95
100
95
100
B
50
200
45
200
45
200
C
100
200
110
200
55
400
Calculate the first-period rates of return on the following
indexes of the three stocks: (Do not round intermediate
calculations. Round answers to 2...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last
period.
P0
Q0
P1
Q1
P2
Q2
A
88
100
93
100
93
100
B
48
200
43
200
43
200
C
96
200
106
200
53
400
Calculate the first-period rates of return on the following indexes
of the three stocks: (Do not round intermediate
calculations. Round your answers to...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last
period.
P0
Q0
P1
Q1
P2
Q2
A
87
100
92
100
92
100
B
47
200
42
200
42
200
C
94
200
104
200
52
400
Calculate the first-period rates of return on the following indexes
of the three stocks: (Do not round intermediate
calculations. Round your answers to...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last period.
P0
Q0
P1
Q1
P2
Q2
A
96
100
101
100
101
100
B
56
200
51
200
51
200
C
112
200
122
200
61
400
Calculate the first-period rates of return on the following indexes
of the three stocks: (Do not round intermediate
calculations. Round your answers to...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last period.
P0
Q0
P1
Q1
P2
Q2
A
86
100
91
100
91
100
B
46
200
41
200
41
200
C
92
200
102
200
51
400
a. Calculate the rate of return on a
price-weighted index of the three stocks for the first period
(t = 0 to t...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last period.
P0
Q0
P1
Q1
P2
Q2
A
99
100
104
100
104
100
B
59
200
54
200
54
200
C
118
200
128
200
64
400
a.
Calculate the rate of...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last period.
P0
Q0
P1
Q1
P2
Q2
A
95
100
100
100
100
100
B
55
200
50
200
50
200
C
110
200
120
200
60
400
Calculate the first-period rates of...

onsider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last
period.
P0
Q0
P1
Q1
P2
Q2
A
86
100
91
100
91
100
B
46
200
41
200
41
200
C
92
200
102
200
51
400
Calculate the first-period rates of return on the following indexes
of the three stocks: (Do not round intermediate
calculations. Round your answers to...

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