Based on the following stock price and shares outstanding information, compute the beginning and ending values for a price-weighted index and a market-value-weighted index. December 31, 2018 December 31, 2019 Shares Stock K Stock M Stock R Price Shares Outstanding Price Outstanding 20 100,000,000 80 2,000,000 32 100,000,000 45 4,000,000* 40 25,000,000 42 25,000,000 *Stock split two-for-one during the year. Index at the beginning was 100 a. Compute the percentage change in the value of each index during the year and the new index b. Explain the difference in results between the two indexes. c. Compute the percentage change for an un-weighted (equal weight $ 1000 is invested in each stock )index and discuss why these results differ from those of the other indexes [40 marks]
Based on the following stock price and shares outstanding information, compute the beginning and ending values for a price-weighted index and a market-value-weighted index. December 31, 2018 December 31, 2019 Shares Stock K Stock M Stock R Price Shares Outstanding Price Outstanding 20 100,000,000 80 2,000,000 32 100,000,000 45 4,000,000* 40 25,000,000 42 25,000,000 *Stock split two-for-one during the year. Index at the beginning was 100 a. Compute the percentage change in the value of each index during the year and the new index b. Explain the difference in results between the two indexes. c. Compute the percentage change for an un-weighted (equal weight $ 1000 is invested in each stock )index and discuss why these results differ from those of the other indexes [40 marks]
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![Based on the following stock price and shares outstanding information, compute the beginning
and ending values for a price-weighted index and a market-value-weighted index.
December 31, 2018
December 31, 2019
Shares
Stock K
Stock M
Stock R
Price Shares
Outstanding
Price Outstanding
20
100,000,000
80
2,000,000
32 100,000,000
45 4,000,000*
40
25,000,000
42
25,000,000
*Stock split two-for-one during the year. Index at the beginning was 100
a. Compute the percentage change in the value of each index during the year and the new index
b. Explain the difference in results between the two indexes.
c. Compute the percentage change for an un-weighted (equal weight $ 1000 is invested in each
stock )index and discuss why these results differ from those of the other indexes
[40 marks]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa6cfa530-7e74-4013-a9a7-79ba033e5858%2Fb0ce1596-8290-4e2f-a691-89eb9a3d5c6d%2F1klae6h_processed.png&w=3840&q=75)
Transcribed Image Text:Based on the following stock price and shares outstanding information, compute the beginning
and ending values for a price-weighted index and a market-value-weighted index.
December 31, 2018
December 31, 2019
Shares
Stock K
Stock M
Stock R
Price Shares
Outstanding
Price Outstanding
20
100,000,000
80
2,000,000
32 100,000,000
45 4,000,000*
40
25,000,000
42
25,000,000
*Stock split two-for-one during the year. Index at the beginning was 100
a. Compute the percentage change in the value of each index during the year and the new index
b. Explain the difference in results between the two indexes.
c. Compute the percentage change for an un-weighted (equal weight $ 1000 is invested in each
stock )index and discuss why these results differ from those of the other indexes
[40 marks]
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