solve the 2nd parts correctly To find the change in a price-weighted index, we can add up the prices across the three stocks and expressthe difference between time 0 and time 1 in percentage terms:SharesPriceStock (million) 2019 2020A85141115B11493983004660Total280 273273 – 280Relative change2.5 %= -0.025280Part 2What is the relative change in a market value-weighted index? Enter your answer as a decimal number orwith the percentage sign.3+ decimals

Market value-weighted index - It is also known as capitalization -weighted index. Here securities…

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What is the relative change in a market value-weighted index? Enter your answer as a decimal number or with the percentage sign.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 10P

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

solve the 2nd parts correctly

To find the change in a price-weighted index, we can add up the prices across the three stocks and express
the difference between time 0 and time 1 in percentage terms:
Shares
Price
Stock (million) 2019 2020
A
85
141
115
B
114
93
98
300
46
60
Total
280 273
273 – 280
Relative change
2.5 %
= -0.025
280
Part 2
What is the relative change in a market value-weighted index? Enter your answer as a decimal number or
with the percentage sign.
3+ decimals

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