Question

You are given the following information.  

      


31-Dec-16

31-Dec-16

31-Dec-17

31-Dec-17

Stock

Price

Shares

Price

Shares

W

$   50.00

10000

$   25.00

20000

X

$ 40.00

5000

$   25.00

10000

Y

$   20.00

20000

$   30.00

20000

Z

$   30.00

15000

$   40.00

15000

Stocks W and X had 2 for 1 splits on December 31, 2016. The information in the table for 2016 is pre-split.

3.4    Calculate the price weighted series for Dec 31, 2016, prior to the splits.

3.5    Calculate the price weighted series for Dec 31, 2016, after the splits.

3.6    Calculate the price weighted series for Dec 31, 2017.

Homework Answers

Answer #1

3.4 Price weighted series as on Dec 31,2016 prior to splits = (50+40+20+30)/4 = 35

3.5 After split, W's price becomes 25 and X's price becomes 20.

Index divisor is calculated as = (50/2+40/2+20+30)/x = 35

(25+20+20+30)/35 = X

X = 2.7143

Price weighted series = (25+20+20+30)/2.7143 = 35

Price weighted series as on Dec 31,2016 after the splits = 35

3.6 Price weighted series as on Dec 31,2017 = (25+25+30+40)/2.7143= 44.21

Price weighted series as on Dec 31,2017 = 44.21

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