Question

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.)

Answer #1

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...

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

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...

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?

Use the following table to answer the next two questions.
Stock
1/2/19 Price
1/2/20 Price
X
50
48
Y*
70
55
Z**
114
69
*4:3 Split after close of 1/2/19
**8:5 Split after close of 1/2/19
Find the percentage change in a price weighted index consisting
of these three stocks from 2019-2020. Round intermediate steps and
your final answer to four decimals.
Find the percentage change of an equally weighted index
consisting of these stocks. Round intermediate steps and your...

Number of shares
Closing Prices
Company
outstanding
Year T
Year T + 1
W
1,500
$22.00
$18.00
X
2,500
35.00
25.00
Y
2,000
10.00
15.00
Z
3,000
50.00
48.00
Find the percentage change of a value-weighted index consisting
of these four stocks from years T to T+1. Round your final answer
to four decimals and enter your answer in decimal format (EX:
.XXXX)
Which of the following is a flaw of price-weighted indices?
They cannot be adjusted for stock splits...

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...

Suppose that the index model for stocks A and B is estimated
from excess returns with the following results:
RA = 4.5% + 1.40RM +
eA
RB = –2.2% + 1.70RM +
eB
σM = 24%;
R-squareA = 0.30;
R-squareB = 0.20
Assume you create a portfolio Q, with investment
proportions of 0.50 in a risky portfolio P, 0.30 in the
market index, and 0.20 in T-bill. Portfolio P is composed
of 60% Stock A and 40% Stock B.
a....

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...

There are two stocks in the market, stock A and stock B. The
price of stock A today is $80. The price of stock A next year will
be $68 if the economy is in a recession, $88 if the economy is
normal, and $100 if the economy is expanding. The probabilities of
recession, normal times, and expansion are 0.2, 0.6, and 0.2,
respectively. Stock A pays no dividends and has a beta of 0.83.
Stock B has an expected...

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