Question

1. Three stocks have share prices of $25, $50, and $30 with total market values of $400 million, $250 million, and $150 million, respectively. If you were to construct a market value-weighted index of the three stocks, what would be the index value? ① 8,500 ② 9,000 ③ 9,250 ④ 9,500

1)-1 With the above benchmark index, today the prices of three stocks changed to $30, $45 and $35. What would be the new index value? ① 9,250 ② 9,500 ③ 9,750 ④ 10,000

1)-2 From the above two questions, what is the 1-day rate of return on the index? ① 5.25% ② 5.50% ③ 5.56% ④ 5.72%

Answer 1

Question 2 has incorrect options. Rectified the same in calculations below. This is leading to incorrect options for Q3