In: Finance
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