Question

You are given the following total market values for an index over a five-year period. Assuming...

You are given the following total market values for an index over a five-year period. Assuming the index starts at 1,000, calculate the index value each year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Market value of the stocks
Year 1: 5,614 million
Year 2: 5,714 million
Year 3: 6,075 million
Year 4: 5,647 million
Year 5: 6,196 million
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Answer #1

Given that Value of Index at year 1 = 1000

Therfore Index Divisor= Market Value of Stock at year 1 / Index Value at year 1

Index Divisor = 5614 / 1000 = 5.614

Now Market Value of Stock at year 2 = $ 5714 Million

Therefore Index Value = 5714 / Index Divisior

Index Value at year 2= 5714 / 5.614 = 1017.81

Now Market Value of Stock at year 3 = $ 6075 Million

Index Value at year 3= 6075 / 5.614 = 1082.12

Now Market Value of Stock at year 4 = $ 5647 Million

Index Value at year 4= 5647 / 5.614 = 1005.88

Now Market Value of Stock at year 5 = $ 6196 Million

Index Value at year 5= 6196 / 5.614 = 1103.67

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