For a price-weighted index, when a lower-price stock is replaced by a higher- price stock, which of the following will is true? 1. The divisor will go up II. The index will go up III. The divisor will go down IV. The index will go down

For a price-weighted index, when a lower-price stock is replaced by a higher- price stock, which of the following will is true? 1. The divisor will go up II. The index will go up III. The divisor will go down IV. The index will go down

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

For a price-weighted index, when a lower-price stock is replaced by a higher-
price stock, which of the following will is true?
1. The divisor will go up
II. The index will go up
III. The divisor will go down
IV. The index will go down
I only
I and II only
Ill only
III and IV only

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