(ii) The market consists of the following stocks. Their prices and number of shares are as...

(ii) The market consists of the following stocks. Their prices and number of shares are as follows:

Stock Price Number of Shares Outstanding

A $10 100,000

B 20 10,000

C 30 200,000

D 40 50,000

a. What is the aggregate market value if a S&P 500 type of measure of the market (value-weighted average) is used?

b. The price of Stock C doubles to $60. What is the percentage increase in the market if a S&P 500 type of measure of the market (value-weighted average) is used?

c. Repeat question (b) but use a Value Line type of measure of the market (i.e., a geometric average) to determine the percentage increase.

d. Suppose the price of stock B doubled instead of stock C. How would the market have fared using the aggregate measures employed in (b) and (c)? Why are your answers different?

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jeff jeffy answered 1 year ago

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