Question

Assume that we are interested in constructing a price-weighted portfolio with three stocks: A, B and C, selling at $15, $50, and $35 respectively. The number of shares outstanding for A, B and C are 3, 2, and 4 millions respectively. If our initial wealth is $1 million, how many shares would you buy in each stock?

150,000; 500,000; 350,000 |

10,526; 7,018; 14,035 |

10,000; 10,000; 10,000 |

157,895; 350,877; 491,228 |

Answer #1

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...

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...

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 $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

Given $100,000 to invest, construct a value-weighted portfolio
of the four stocks listed below.
Stock
Price/Share
($)
Number of Shares Outstanding (millions)
Golden Seas
14
1.13
Jacobs and Jacobs
24
1.28
MAG
45
30.01
PDJB
6
13.55
Enter the portfolio weight below: (Round to two decimal
places.)
Stock
% of Total Value
(portfolio weight)
Golden Seas
nothing%
Enter the portfolio weight below: (Round to two decimal
places.)
Stock
% of Total Value
(portfolio weight)
Jacobs and Jacobs
nothing%
Enter the...

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):...

Consider the following information about three stocks. Assume
you create your own portfolio and the weightage of the portfolio
for the following stock is as follows: 50% of stock A, 30% of stock
B and 20% of stock C.
Nigeria Economy
Probability of Happening
stock A
stock B
stock C
Expansion
0.4
26%
40%
50%
Normal
0.3
20%
30%
35%
Recession
0.3
15%
25%
10%
Required:
1) Find the portfolio expected return. (Hint: Only
one answer.)
2) Find the standard...

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...

Consider the three stocks in the following table. P(t)
represents price at time t, and Q(t) represents shares outstanding
at time t. Stock C splits two-for-one in the last period.
a.) What is the new divisor for the price-weighted index that is
formed using Stocks A, B, and C if the starting divisor is 3?
b.)What is the rate of return for the price-weighted index that
is formed using Stocks A, B, and C from time period 1 to time...

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...

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