Question

1. When computing a value-weighted index, we use a "Divisor".

True

False

2. The primary market for stocks is the IPO market, not the stock market.

True

False

3. An index has a market value of 13,447.25 at the beginning of the period and 13,893.57 at the end of the period. If you want the beginning index value to be 2,000, what will be the ending index value?

a.		2,000
b.		13,893.57
c.		13,447.25
d.		none

ANSWER all or i will be giving a thumbs down and explain your answer

Thank you

Answer 1

1.) True : while computing value weighted index we use a divisor. Reason the formula as follows sum of the market capitalization for each company and divided it by a divisor which will help to make it a round number.

2.) True: The primary market for stocks is the IPO market initial public offering. The governmanet companies can raise the capital by issuing shares in stock through initial public offerings. The stock markets are the secondary markets.

3.) Ending index value (13,893.57 / 13,447.25 ) * 2000 = 2,066.38

   Hence the option is none i.e., D