Question

5. A price-weighted index has 3 stocks: A, B and C. Their price at the start of the index was $35, $48 and $90.

What is the initial divisor if the index start with a value of 100?

By the end of the first year, the price of the 3 stocks is $40, $52 and $83 respectively. How much has the index gone up?

If stock C has a 3-for-1 split, what would be the new index value after one year?

Answer #1

A price-weighted index consists of stocks A, B, and C which are
priced at $38, $24, and $26 a share, respectively. The current
index divisor is 2.7. What will the new index divisor be if stock B
undergoes a 3-for-1 stock split? (Round your final answer to four
decimal points.)

The Hydro Index is a price weighted stock index based on the 4
largest boat manufacturers in the nation. Consider the four stocks
in the following table. Pt represents price at time t,
and Qt represents shares outstanding at time t. (Please pay close
attention to stock split)
P0
Q0
P1
Q1
P2
Q2
A
80
200
90
200
98
200
B
50
300
40
300
50
300
C
90
200
110
200
115
200
D
100
100
90
100...

You are given the following information concerning two stocks
that make up an index. What is the percentage
value-weighted return for the index?
Shares Outstanding
Beginning of Year Price
End of year Price
Kirk, Inc.
46,000
$83
$90
Picard Co.
60,000
40
52

The price-weighted Dow Jones Industrial Average Index closed at
12,500 today and the divisor was 0.14. One of the 30 constituent
stocks had a 5-for-1 stock split right declining from $100 to $20
per share right after the market close (immediately after the index
value and divisor above were observed). What would the new divisor
have to be to keep the index value unchanged at
12,500?
Group of answer choices
1) 0.1320
2) 0.1424
3) 0.1416
4) 0.1336

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

1. When computing a value-weighted index, we use a
"Divisor".
True
False
2. The primary market for stocks is the IPO market, not the
stock market.
True
False
3. An index has a market value of 13,447.25 at the beginning of
the period and 13,893.57 at the end of the period. If you want the
beginning index value to be 2,000, what will be the ending index
value?
a.
2,000
b.
13,893.57
c.
13,447.25
d.
none
ANSWER all or i...

Considering three stocks in the following table.
Pt represents a price at day t, and
Qt represents the number of shares outstanding at
day t. Stock C splits ten-for-one at the beginning of day 2.
P0
Q0
P1
Q1
P2
Q2
A
81.52
1000
85.32
1000
90.16
1000
B
48.12
2000
45.24
2000
47.52
2000
C
611.23
2000
632.25
2000
60.45
20000
Calculate the rate of return on a price-weighted index of the
three stocks for the first day (...

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?

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
55
65
65
65
65
65
B
45
120
35
120
35
120
C
90
120
95
120
50
240
Calculate the first-period rates of return on the following
indexes of the three stocks (t = 0 to t = 1):...

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