A price weighted index has three stocks A, B, and C priced at $10, $20, and $15 yesterday, respectively. Yesterday, stock B has a split where one share split into 2 and the price was reduced from $20 to $10. If the prices changed to $11, $9, and $16 today, what is the new index value? 16 15.43 14.89 13.67
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- The Dow Jones Industrial Average (DJIA) and the Standard Poors 500 (SP 500) indexes are used as measures of overall movement in the stock market The DJIA is based on the price movements of 30 large companies: the SP 500 is an index composed of 500 stocks. Some say the SP 500 is a better measure of stock market performance because it is broader based. The closing price for the DJIA and the SP 500 for 15 weeks, beginning with January 6, 2012, follow (Barrons web site, April 17, 2012). a. Develop a scatter chart for these data with DJIA as the independent variable. What does the scatter chart indicate about the relationship between DJIA and SP 500? b. Develop an estimated regression equation showing how SP 500 is related to DJIA. What is the estimated regression model? c. What is the 95% confidence interval for the regression parameter 1? Based on this interval, what conclusion can you make about the hypotheses that the regression parameter 1 is equal to zero? d. What is the 95% confidence interval for the regression parameter 0? Based on this interval, what conclusion can you make about the hypotheses that the regression parameter 0 is equal to zero? e. How much of the variation in the sample values of SP 500 does the model estimated in part (b) explain? f. Suppose that the closing price for the DJIA is 13,500. Estimate the closing price for the SP 500. g. Should we be concerned that the DJIA value of 13,500 used to predict the SP 500 value in part (f) is beyond the range of the DJIA used to develop the estimated regression equation?There are three stocks in a price-weighted index: A $100 B $20 C $60 a. What is the average value for the index? b. Assume stock A goes down by 25 percent and stock B goes up by 25 percent, and stock C remains the same. What is the new average value for the index? c. Explain why in part b the average changed with two stocks moving up and down by the same percentage amount.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. P0 Q0 P1 Q1 P2 Q2 A 100 625 105 625 105 625 B 65 650 60 650 60 650 C 70 150 90 150 45 300 a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Calculate the new divisor for the price-weighted index in year 2. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the rate of return for the second period (t = 1 to t = 2).
- 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. P0 Q0 P1 Q1 P2 Q2 A 87 100 92 100 92 100 B 47 200 42 200 42 200 C 94 200 104 200 52 400 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2).Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares outstanding at time t. Stock C splits two-for-one in the last period. (LO 2-2) A B C Po 90 50 100 Qo 100 200 200 P₁ 95 45 110 Q₁ 100 200 200 P₂ 95 45 55 a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). b. What must happen to the divisor for the price-weighted index in year 2? c. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t=2). Q₂ 100 200 400Ralph is constructing a price-weighted index. On March 1, 2XX1, he has the following stocks in the index: Company Share price # shares outstanding Walmart $42.6 26,000 Kmart $18.76 19,000 Venture $55.11 63,000 Macy’s $39.61 45,000 What is the price-weighted index on March 1, 2XX1? (Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.167))
- A benchmark market value index is comprised of three stocks. Yesterday the three stocks were priced at $16, $26, and $55. The number of outstanding shares for each is 750,000 shares, 650,000 shares, and 350,000 shares, respectively. If the stock prices changed to $20, $24, and $57 today respectively, what is the 1-day rate of return on the index?A price-weighted index consists of Stocks A, B, and C which are priced at $50, $35, and $15 a share, respectively. The current index divisor is 3. What will the new index divisor be if Stock A undergoes a 5-for-1 stock split? (show your steps)An equal-weighted index is composed of 3 stocks. Stock A is trading at $53, stock B at $75 and stock C at $81. One year later, stock A is now worth $41, stock B is $76, and stock C is $128. Neither of the 3 stocks have paid any dividends. The total return for this index is closest to: Question 6 options: A) 166.50% B) 12.24% C) 81.99%
- Assume the Dow Jones Industrial Average index consisted of two stocks, POS andCLO prior to the end of trading hours yesterday. At the trading close, the ticker CLO isreplaced by LOG with stock price $55. Assume the firm (old ticker: CLO, new ticker:LOG)has no change in their fundamental value. Prices are shown in the table below. What is thenew divisor ??? Round your answer to three decimal places Please give a detailed explanation using formulas, not excel. A. 1.048B. 1.078C. 1.359D. 0.736E. 0.927F. 2.000Consider 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. P0 Q0 P1 Q1 P2 Q2 A 84 100 89 100 89 100 B 44 200 39 200 39 200 C 88 200 98 200 49 400 Calculate the first-period rates of return on the following indexes of the three stocks: (Do not round intermediate calculations. Round your answers to 2 decimal places.)a. A market value–weighted index b. An equally weighted index1.You are given the following information regarding prices for a sample of stocks. PRICE STOCK NUMBER OF SHARES T T +1 A 1,000,000 60 80 B 10,000,000 20 35 C 30,000,000 18 25 a.Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1. b.Construct a value-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1 c.Briefly discuss the difference in the results for the two indexes.
