An equally weighted index has three stocks A, B, and C priced at $10, $20, and...

An equally weighted index has three stocks A, B, and C priced at $10, $20, and $20 yesterday, respectively. Yesterday, stock A has a split where one share split into 2 and the price was reduced from $10 to 5. If the equally weighted index was 100 yesterday and the prices changed to $6, $18, and $17, what is the new index value? 16.11 102.54 89.6 98.33

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Equally weighted index assigns equal weight to each of its constituent securities.

Equal weighted index = (1+ average percentage change in index stocks)* initial index value

Average % change ={ [(2*6-10)/10]+[(18-20)/20]+[(17-20)/20] }/3

= -5%/3

= -1.66667%

=(1-0.016667)*100

= 98.33

jeff jeffy answered 2 years ago

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