Assume the following five companies are used in computing an index: a. If the index is price

Question:

Assume the following five companies are used in computing an index:
Assume the following five companies are used in computing an


a. If the index is price weighted, what will be the value of the index on December 31, 2007? (Take the average price on December 31, 2007, and divide by the average price on January 1, 1984, and multiply by 100.)
b. If the index is value weighted, what will be the value of the index on December 31, 2007? (Take the total market value on December 31, 2007, and divide by the total market value on January 1, 1984, and multiply by 100.)
c. Explain why the answer in part b is different from the answer in part a.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamentals of Investment Management

ISBN: 978-0078034626

10th edition

Authors: Geoffrey Hirt, Stanley Block

Question Posted: