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 $50, $35, and $15 a share, respectively. The current
index divisor is 2.75. What will the new index advisor be if stock
A undergoes a 5-for-1 stock split?
A. 0.40
B. 0.65
C. 1.00
D. 1.65

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.)

A price-weighted index consists of stocks A, B, and C which are
priced at $50, $35, and $15 a share, respectively. The current
index divisor is 2.75. What will the new index advisor be if stock
A undergoes a 5-for-1 stock split?
Multiple Choice
A. 0.40
B. 0.65
C. 1.00
D. 1.65
1.85

Assume that you construct a price weighted index of 30 stocks.
The sum of the prices of these stocks is $4000. The divisor for
this index is 30, and the value of this index is 100. Now assume
that one of the 30 stocks, with an average price of $400, has a
four-for-one stock split while the value of other stocks remains
unchanged.
a) If you make no adjustments to the index, what will be the new
value of the...

An index consists of three stocks (A, B, C). The prices of these
three stocks are $45, $126, and $64, respectively. If Stock B has a
3-for-1 stock split, what is the new index divisor?

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...

Problem 5-1 Price-Weighted Divisor (LO4, CFA2)
Able, Baker, and Charlie are the only three stocks in an index.
The stocks sell for $38, $200, and $106, respectively. If Baker
undergoes a 3-for-2 stock split, what is the new divisor for the
price-weighted index? (Do not round intermediate
calculations. Round your answer to 5 decimal places.)

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

Below is a list of 3 stocks. Calculate the return based on
price-weighted index, value-weighted index, and equal-weighted
index. (Assume you invested yesterday).
Stock
Price yesterday
Price today
Market Cap (billions)
JPM
$116
$115
362
WFC
$49
$48
214
BAC
$28
$29
259

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

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