Question:
Reconsider companies XYZ and ABC from Concept Check Question 2.4. Calculate 2. 5 the percentage change in the market value–weighted index. Compare that to the rate of return of a portfolio that holds $500 of ABC stock for every $100 of XYZ stock (i.e., an index portfolio).
Concept Check Question 2.4
Suppose XYZ’s final price in Table 2.4 increases in price to $110, while ABC falls to $20. Find the percentage change in the price-weighted average of these two stocks. Compare that to the percentage return of a portfolio that holds one share in each company.
Transcribed Image Text:
U.S. Government Bonds and Notes
Representative Over-the-Counter quotation based on transactions of $1 million or more.
Treasury bond, note and bill quotes are from midafternoon. Colons in bond and note bid-and-asked quotes represent
32nds; 101:01 means 101/2. Net change in 32nds. n-Treasury Note. Hinflation-indexed issue. Treasury bill quotes
in hundredths, quoted in terms of a rate of discount. Days to maturity calculated from settlement date. All yields are
to maturity and based on the asked quote. For bonds callable prior to maturity, yields are computed to the earliest
call date for issues quoted above par and to the maturity date for issues quoted below par.
*-When issued. Daily change expressed in basis points.
RATE
3.375
3.125
2.250
MATURITY
MO/YR
Jan 07i
Jan 07n
Feb 07n
6.250
Feb 07m
3.375
Feb 07n
3.750 Mar 07n
3.875
Feb 13n
3.625 May 13
1.875
Jul 131
4.250
Aug 13m
12.000
Aug 13
BID ASKED CHG
99:28
99:29
99:27
99:28
99:21
99:22
100:04
100:05
99:23
99:24
99:21
99:22
96:06
96:07 +8
94:23
94:24 +8
97:01 +1
98:01 +9
111:05
97:00
98:00
111:04
ASK
YLD RATE
6.72
4.62
4.89
4.73
4.90
4.99
4.59
4.58
MATURITY
MO/YR
Nov 13m
Jan 14i
Feb 14m
4.750
May 14m
13.250 May 14
2.000
Jul 14i
Aug 14m
Aug 14
Nov 14
Nov 14
Jan 15i
2.37
4.60
+2 4.71
4.250
2.000
4.000
4.250
12.500
11.750
4.250
1.625
ASK
YLD
BID ASKED CHG
97:29 97:30 +10 4.60
97:16 97:17 +2.38.
96:09 96:10 +10 4.61
100:26 100:27
+9 4.61
119:02 119:03 +4 4.61
97:14 97:15 2.37
97:21 97:22 +10 4.61
119:04 119:05 +4 4.62
118:30 118:31 +6 4.59
97:19 97:20
+9 4.61
94:18
94:19
+1 2.37
FIGURE 2.4
Listing of Treasury issues
Source: From The Wall Street
Journal, January 5, 2007.
Reprinted by permission
of Dow Jones & Company,
Inc. via Copyright Clearance
Center, Inc. © 2007 Dow Jones
& Company, Inc. All Rights
Reserved Worldwide.