Consider the following information:
Shares Outstanding 
Price per share 

Beginning of the year 
End of the year 

ABC Inc. 
20, 000 shares 
$15 
$20 
MMM Inc. 
10,000 shares 
$70 
$80 
What is the valueweighted return for the index?
A. 
5% 

B. 
10% 

C. 
15% 

D. 
18% 

E. 
20% 
For calculating the valueweighted return for the index, the value at the beginning and the value at the end of the year have to be calculated.
Value at the beginning of the year = (20,000 x $15) + (10,000 x $70) = $300,000 + $700,000 = $1,000,000
Value at the beginning of the year is $1,000,000
Value at the end of the year = (20,000 x $20) + (10,000 x $80) = $400,000 + $800,000 = $1,200,000
Value at the end of the year = $1,200,000
Value weighted index return = {(Value at end  Value at beginning) / Value at beginning} x100
= {($1,200,000  $1,000,000) / $1,000,000} x 100
= ($200,000 / $1,000,000) x 100
= 0.2 x 100
= 20%
Answer is option E i.e. 20%
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