Question

You are given the following information concerning two stocks that make up an index. |

Assume that you want to reindex with the index value at the
beginning of the year equal to 100. What is the index level at the
end of the year? |

Price per Share | ||||||||||||

Shares Outstanding | Beginning of Year | End of Year |
||||||||||

Kirk, Inc. | 33,000 | $ | 47 | $ | 52 | |||||||

Picard Co. | 31,500 | 77 | 83 | |||||||||

Index level |

Answer #1

**The index level is computed as shown below:**

**= [ (Number of shares of Kirk Inc x End of year price
per share + Number of shares of Picard Co x End of year price per
share) / (Number of shares of Kirk Inc x Beginning of year price
per share + Number of shares of Picard Co x Beginning of year price
per share) ] x 100**

= [ (33,000 x $ 52 + 31,500 x $ 83) / (33,000 x $ 47 + 31,500 x $ 77) ] x 100

= ($ 4,330,500 / $ 3,976,500) x 100

**= 108.90 Approximately**

Feel free to ask in case of any query relating to this question

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