A price-weighted index comprises of 3 stocks A, B, and C. The beginning of year prices of 3 stocks are $25, $30, and $65, respectively. The end of year prices of 3 stocks are $20, $23, and $86, respectively. What is the return on the price-weighted index over the year?
A price-weighted index comprises of 3 stocks A, B, and C. The beginning of year prices of 3 stocks are $25, $30, and $65, respectively. The end of year prices of 3 stocks are $20, $23, and $86, respectively. What is the return on the price-weighted index over the year?
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 7P
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Step 1 Note
VIEWStep 2 Introduction of price weighted index
VIEWStep 3 Total value of all stocks at starting of the year
VIEWStep 4 Calculation of Beginning Index value
VIEWStep 5 Calculation of Total value of all stocks at the end of the year
VIEWStep 6 Calculation of Ending Index value
VIEWStep 7 Calculation of Numerical loss or gain on investment
VIEWStep 8 Calculation of Rate of return of the index
VIEWStep 9 Final answer
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