You are given the following information regarding prices for a sample of stocks.
PRICE | ||||||
Stock | Number of Shares | T | T + 1 | |||
A | 3,800,000 | $68 | $88 | |||
B | 12,000,000 | 24 | 34 | |||
C | 29,000,000 | 19 | 27 |
Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1. Do not round intermediate calculations. Round your answer to two decimal places.
%
Construct a value-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1. Do not round intermediate calculations. Round your answer to two decimal places.
%
a).
Price weighted Index is calculated as the average of the prices.
Price weighted Index at T= (68+24+19)/3= 37
Price weighted Index at T1= (88+34+27)/3= 49.67
Percentage Change= (49.67-37)/37= 34.23%
b).
Value weighted Index is calculated as the weightage of the Prices.
Value weighted Index= (3800000*68)+(12000000*24)+(29000000*19)= 1097400000
Value weighted Index at T1= (3800000*88)+(12000000*34)+(29000000*27)= 1525400000
Percentage Change= (1525400000-1097400000)/1097400000= 39.00%
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