# Question

Assume the following stocks make up a value-weighted index:

a. Compute the total market value and the weights assigned to each stock. Round to two places to the right of the decimal point. (The weights may add up to slightly more than 100 percent due to rounding.)

b. Assume the price of the shares of the Snider Corporation goes up by 50 percent, while that of the Hodges Corporation goes down by a mere 10 percent. The other two stocks remain constant. What will be the newly established value for the index?

c. Explain why the index followed the pattern it did in part b.

a. Compute the total market value and the weights assigned to each stock. Round to two places to the right of the decimal point. (The weights may add up to slightly more than 100 percent due to rounding.)

b. Assume the price of the shares of the Snider Corporation goes up by 50 percent, while that of the Hodges Corporation goes down by a mere 10 percent. The other two stocks remain constant. What will be the newly established value for the index?

c. Explain why the index followed the pattern it did in part b.

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