A price-weighted index contains the following three stocks today: 1. Stock X, 10 million shares outstanding,...
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A price-weighted index contains the following three stocks today: 1. Stock X, 10 million shares outstanding, priced at $55 a share. 2. Stock Y, 30 million shares outstanding, priced at $28 a share. 3. Stock Z, 50 million shares outstanding, priced at $15 a share. A year from now, the index looks like this: 1. Stock X, 10 million shares outstanding, priced at $60 a share. 2. Stock Y, 30 million shares outstanding, priced at $25 a share. 3. Stock Z, 50 million shares outstanding, priced at $14 a share. Based on these numbers, what is the rate of return on the index over the next year? Take your number out to three decimals (for example, 8.6% = .086). A price-weighted index contains the following three stocks today: 1. Stock X, 10 million shares outstanding, priced at $55 a share. 2. Stock Y, 30 million shares outstanding, priced at $28 a share. 3. Stock Z, 50 million shares outstanding, priced at $15 a share. A year from now, the index looks like this: 1. Stock X, 10 million shares outstanding, priced at $60 a share. 2. Stock Y, 30 million shares outstanding, priced at $25 a share. 3. Stock Z, 50 million shares outstanding, priced at $14 a share. Based on these numbers, what is the rate of return on the index over the next year? Take your number out to three decimals (for example, 8.6% = .086).
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