Question
In: Finance
1. a. You are creating an index for the four following stocks: Stock Price, t=0 Price,...
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
Solutions
jeff jeffy answered 4 months agoRelated Solutions
Consider the following three stocks that constitute a stock market index. Stock Beginning Price Ending Price...
Consider the following three stocks
that constitute a stock market index.
Stock
Beginning
Price
Ending Price
# Shares (000s)
X
25
27
10,000
Y
100
140
1,000
Z
1500
1700
200
Market-cap-weighted
index and price-weighted indexes would be most sensitive
to which of these stocks and why?
You construct a price-weighted index of 55 stocks. At the beginning of the day, the index...
You construct a price-weighted index of 55 stocks. At the
beginning of the day, the index is 8,710.44. During the day, 54
stock prices remain the same, and 1 stock price increases $5.40. At
the end of the day, your index value is 8,757.89. What is the
divisor on your index?
A price weighted index is composed of two stocks. After experiencing a 3:1 split, stock one...
A price weighted index is composed of two stocks. After
experiencing a 3:1 split, stock one is priced at $22.25. Stock two
is priced at $208.25. The original divisor of the index is 2.0.
Compute the new divisor.
Boran Stockbrokers, Inc., selects four stocks for the purpose of developing its own index of stock...
Boran Stockbrokers, Inc., selects four stocks for the purpose of
developing its own index of stock market behavior. Prices per share
for a year 1 base period, January year 3, and March year 3 follow.
Base-year quantities are set on the basis of historical volumes for
the four stocks.
Stock
Industry
Year 1
Quantity
Price per Share
($)
Year 1
Base
January
Year 3
March
Year 3
A
Oil
100
31.50
20.75
22.50
B
Computer
150
65.00
49.00
45.50
C...
Boran Stockbrokers, Inc., selects four stocks for the purpose of developing its own index of stock...
Boran Stockbrokers, Inc., selects four stocks for the purpose of
developing its own index of stock market behavior. Prices per share
for a year 1 base period, January year 3, and March year 3 follow.
Base-year quantities are set on the basis of historical volumes for
the four stocks.
Stock
Industry
Year 1
Quantity
Price per Share
($)
Year 1
Base
January
Year 3
March
Year 3
A
Oil
100
29.50
22.75
22.50
B
Computer
150
65.00
49.00
47.50
C...
Boran Stockbrokers, Inc., selects four stocks for the purpose of developing its own index of stock...
Boran Stockbrokers, Inc., selects four stocks for the purpose of
developing its own index of stock market behavior. Prices per share
for a year 1 base period, January year 3, and March year 3 follow.
Base-year quantities are set on the basis of historical volumes for
the four stocks.
Stock
Industry
Year 1
Quantity
Price per Share
($)
Year 1
Base
January
Year 3
March
Year 3
A
Oil
100
29.50
24.75
22.50
B
Computer
150
65.00
49.00
49.50
C...
The following three defense stocks are to be combined into a stock index in January 2019...
The following three defense stocks are to be combined into a
stock index in January 2019 (perhaps a portfolio manager believes
these stocks are an appropriate benchmark for his or her
performance). Assume the index is scaled by a factor of 10 million;
that is, if the total value of all firms in the market is $5
billion, the index would be quoted as 500.
PRICE
Shares
(millions)
1/1/19
1/1/20
1/1/21
Douglas McDonnell
425
$
72
$
75
$
92...
The following three defense stocks are to be combined into a stock index in January 2019...
The following three defense stocks are to be combined into a
stock index in January 2019 (perhaps a portfolio manager believes
these stocks are an appropriate benchmark for his or her
performance):
Price Shares (millions) 1/1/19 1/1/20 1/1/21
Douglas McDonnell 210 $94 $ 97 $ 111
Dynamics General 450 $36 $31 $45
International Rockwell 350 $65 $54 $68
a. Calculate the initial value of the index if a price-weighting
scheme is used.
b. What is the rate of return on...
The following three defense stocks are to be combined into a stock index in January 2016...
The following three defense stocks are to be combined into a
stock index in January 2016 (perhaps a portfolio manager believes
these stocks are an appropriate benchmark for his or her
performance). Assume the index is scaled by a factor of 10 million;
that is, if the total value of all firms in the market is $5
billion, the index would be quoted as 500.
Price
Shares
(millions)
1/1/16
1/1/17
1/1/18
Douglas McDonnell
350
$
65
$
69
$
81...
The following three defense stocks are to be combined into a stock index in January 2016...
The following three defense stocks are to be combined into a
stock index in January 2016 (perhaps a portfolio manager believes
these stocks are an appropriate benchmark for his or her
performance). Assume the index is scaled by a factor of 10 million;
that is, if the total value of all firms in the market is $5
billion, the index would be quoted as 500.
Price
Shares
(millions)
1/1/16
1/1/17
1/1/18
Douglas McDonnell
200
$
70
$
73
$
87...
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