Assume that there are two stocks, DELL and P&G, in an Index. The price of DELL...

Assume that there are two stocks, DELL and P&G, in an Index.

The price of DELL is currently $100 per share, there are 50 shares of DELL stock outstanding, and the return on DELL stock over the next year will be 25%.

The price of P&G is currently $50 per share, there are 100 shares of P&G stock outstanding, and the return on P&G stock over the next year will be 10%.

19) What is the return over the year on a MARKET VALUE-WEIGHTED INDEX?

A. 17.5%

B. 20%

C. 25%

D. 10%

E. NONE OF THE ABOVE (Put the correct answer next to the letter E on the answer sheet.)

20) Which stock, if any, carries more weight when calculating the rate of return using the MARKET VALUE-WEIGHTED INDEX method?

A. DELL

B. P&G

C. THEY CARRY THE SAME WEIGHT

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jeff jeffy answered 1 year ago

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