Question

A price-weighted index has three stocks priced at $19, $22, and $33. The number of outstanding shares for each is 100,000 shares, 200,000 shares and 220,000 shares, respectively. If prices changed to $18, $19, and $39 at t=1 , what is the rate of return of the index for this period?

Answer #1

Initial value of index = Price of first stock * Number of shares for first stock + Price of second stock * Number of shares for second stock + Price of third stock * Number of shares for third stock.

= 19 * 100000 + 22 * 200000 + 33 * 220000

= 1900000 + 4400000 + 7260000

= $ 13560000.

Revised value of index = Revised Price of first stock * Number of shares for first stock + Revised Price of second stock * Number of shares for second stock + Revised Price of third stock * Number of shares for third stock.

= 18 * 100000 + 19 * 200000 + 39 * 220000

= 1800000 + 3800000 + 8580000

= $ 14180000.

**Rate of return for index = (Revised value of index -
Initial value of index) / Initial value of index**

= (14180000 - 13560000) / 13560000

= 620000 / 13560000

= 0.0457 i.e., **4.57 %** (0.0457 * 100).

**Conclusion :- Rate of return for index over one year
period = 4.57 % (approx)**

"A benchmark index has three stocks priced at $32, $35, and $70.
The number of outstanding shares for each is 350000 shares, 405000
shares, and 553000 shares, respectively. Suppose the price of these
three stocks changed to $30, $40, and $62 and number of outstanding
shares did not change, what is the equal-weighted index
return?"
-3.65%
0.72%
-1.13%
-4.45%
question 18

A benchmark market value index is comprised of three stocks.
Yesterday the three stocks were priced at $22, $32, and $70. The
number of outstanding shares for each is 780,000 shares, 680,000
shares, and 380,000 shares, respectively. If the stock prices
changed to $26, $30, and $72 today respectively, what is the 1-day
rate of return on the index?
4.52%
3.85%
2.69%
6.05%

14
A benchmark index has three stocks priced at $40, $63, and $73.
The number of outstanding shares for each is 435,000 shares,
575,000 shares, and 723,000 shares, respectively. If the market
value weighted index was 950 yesterday and the prices changed to
$40, $59, and $77 today, what is the new index value?
Multiple Choice
945
950
955
940

Suppose that a stock index is constructed with three stocks
priced at $7, $43, and $56. The number of outstanding shares for
each is 500,000 shares, 405,000 shares, and 553,000 shares,
respectively. Today the prices for each stock are changed to $14,
$44, and $52 and the number of outstanding shares for each are
changed to 250,000 shares, 405,000 shares and 553,000 shares today,
what is the price weighted index value today if the index yesterday
was 10,500?

Suppose that a stock index is constructed with three stocks
priced at $7, $43, and $56. The number of outstanding shares for
each is 500,000 shares, 405,000 shares, and 553,000 shares,
respectively. Today the prices for each stock are changed to $14,
$44, and $52 and the number of outstanding shares for each are
changed to 250,000 shares, 405,000 shares and 553,000 shares today,
what is the equal weighted index value today if the index yesterday
was 1000?

You construct a price-weighted index of 33 stocks. At the
beginning of the day, the index is 9,241.90. During the day, 32
stock prices remain the same, and 1 stock price increases $4.10. At
the end of the day, your index value is 9,267.86. What is the
divisor on your index? (Do not round intermediate calculations.
Round your answer to 8 decimal places.)

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,...

Consider the three stocks in the following table.
Pt represents price at time t, and
Qt represents shares outstanding at time
t. Stock C splits two-for-one in the last
period.
P0
Q0
P1
Q1
P2
Q2
A
97
100
102
100
102
100
B
57
200
52
200
52
200
C
114
200
124
200
62
400
a. Calculate the rate of return on a
price-weighted index of the three stocks for the first period
(t = 0 to t...

An index consists of 3 stocks: A, B and C. At date 0, the prices
per share for A, B and C are $13, $60, and $15, respectively. At
date 0, the number of shares outstanding for A, B, and C are 100,
120, and 3000 respectively. At date 1, the prices per share for A,
B and C are $12, $22, and $12, respectively. At date 1, the number
of shares outstanding for A, B, and C are 100,...

A price-weighted index consists of stocks A, B, and C which are
priced at $50, $35, and $15 a share, respectively. The current
index divisor is 2.75. What will the new index advisor be if stock
A undergoes a 5-for-1 stock split?
A. 0.40
B. 0.65
C. 1.00
D. 1.65

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