Question

The ABC stock index is based on the listed price of stock in three companies, A, B and C. The index is market weighted and corrected for dividends and stock splits. On Day 1, the index is at 2000 points when markets close. Then the price of each share in A is 3,24, in B 0,75 and in C 6,7. There have been issued (and sold to investors) 100 million shares in A, 250 million in B and 100 million in C.

The day after, the following happens: Firm B goes through with a 1-for-3 reverse stock split. Firm A pays a dividend of 0,10 per share.

At the end of the day, shares in A are trading at 3,20, in B at 2,15 and in C at 6,1. What is the level of the index then?

Answer 1