Question

1.

a. You are creating an index for the four following stocks:

Stock	Price, t=0	Price, t=1	Shares (million)
ABC	122	107	100
DEF	46	50	500
GHI	21	26	1,200
JKL	26	30	450

What is the one day return for the index if it is price-weighted? Present your answer as the percent change from t=0 to t=1 to the nearest two decimals in this format, 1.23%

b.

Stock	Price, t=0	Price, t=1	Shares (million)
ABC	122	107	100
DEF	46	50	500
GHI	26	26	1,200
JKL	26	30	450

What is the one day return for the index if it is market capitalization-weighted? Present your answer as the percent change from t=0 to t=1 to the nearest two decimals in this format, 1.23%

c.

Stock	Price, t=0	Price, t=1	Shares (million)
ABC	120	124	100
DEF	48	50	500
GHI	24	26	1,200
JKL	26	30	450

Suppose that at the conclusion on t=1 trading day, stock ABC does a 2:1 stock split, what is the new divisor for your price-weighted index? Present your answer rounded to the nearest two digits like this, 1.23

Answer 1