Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Chapter 2, Problem 20PS
Using the data in the previous problem, calculate the first period
a. A market value-weighted index
b. An equally weighted index
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Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period.
a. A market-value-weighted index. rate of returnb. An equally weighted index. rate of return
Given the following information on five stocks, construct: a. A simple price-weighted average b. A value-weighted
average c. A geometric average d. What is the percentage increase in each average if the stock prices change to those in
Column I? e. What is the percentage increase in each average if the stock prices change from those in the Price column to
those in Column II? f. Why were the percentage changes different in parts (d) and (e)? g. If you were managing a fund and
wanted a source to compare your results to, which of the three averages would you prefer to use, and why?
Stock Price
# of Shares I
II
A
B
C
D
E
F
$12.00 150,000
$14.00
125,000
$11.00 200,000
$ 22.00 80,000
$8.00
30,000
$29.00 140,000
$12.00
$12.00
$14.00 $14.00
$20.00 $11.00
$ 22,00 $ 22.00
$8.00
$15.00
$29.00 $29.00
Using the data in the chart, calculate the first-period rates of return on the following indexes of the three stocks:
A market-value-weighted index.
An equally weighted index.
stocks
P0
Q0
P1
Q1
P2
Q2
A
90
100
95
100
95
100
B
50
200
45
200
45
200
C
100
200
110
200
55
400
(Pt represents price at time t, and Qt represents shares outstanding at time t.)
Chapter 2 Solutions
Essentials Of Investments
Ch. 2 - Prob. 1PSCh. 2 - Why do most professionals consider the Wilshire...Ch. 2 - Prob. 3PSCh. 2 - What are the major components of the money market?...Ch. 2 - Describe alternative ways that an investor may add...Ch. 2 - Why are hightaxbracket investors more inclined to...Ch. 2 - Prob. 7PSCh. 2 - How does a municipal revenue bond differ from a...Ch. 2 - Prob. 9PSCh. 2 - 10. What is meant by limited liability? (LO 2-1)
Ch. 2 - Which of the following correctly describes a...Ch. 2 - Why are money market securities sometimes referred...Ch. 2 - A municipal bond carries a coupon rate of 4.25%...Ch. 2 - Suppose that short-term municipal bonds currently...Ch. 2 - An investor is in a 30% combined federal plus...Ch. 2 - Find the equivalent taxable yield of the municipal...Ch. 2 - Prob. 17PSCh. 2 - Prob. 18PSCh. 2 - Prob. 19PSCh. 2 - Using the data in the previous problem, calculate...Ch. 2 - Prob. 21PSCh. 2 - What would happen to the divisor of the Dow Jones...Ch. 2 - A T-hill with face value $10.000 and 87 days to...Ch. 2 - Prob. 24PSCh. 2 - Prob. 25PSCh. 2 - What options position is associated with: (LO 2-3)...Ch. 2 - Why do call options with exercise prices higher...Ch. 2 - Both a call and a put currently are traded on...Ch. 2 - Prob. 30PSCh. 2 - Examine the stocks listed in Figure 2.8. For what...Ch. 2 - Find the after-tax return lo a corporation that...Ch. 2 - Prob. 33CCh. 2 - Prob. 34CCh. 2 - Prob. 1CPCh. 2 - Go to the website for The Walt Disney Co (DIS) and...Ch. 2 - Prob. 2WM
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