Actual data for the following stocks in the pharmaceutical industry.

	Pfizer	Merck	Johnson & Johnson	Moderna
Price/share	$46	$88	$168	$138
# shares o/s *	5.616	2.525	2.583	0.390

Question 2 (continued)

*FYI: number of shares outstanding is in billions

Part I:

Suppose you create a 3-stock pharmaceutical industry index using Merck, Johnson & Johnson, and Moderna only.

1. Determine this index value if it is price-weighted. Divisor = 3.00 Show all work.
2. Determine this index value if it is value-weighted. Divisor (in billions) = 5.827 Show all work.
3. Now suppose Johnson & Johnson does a 4:1 stock split immediately after trading close on September 16^th. Calculate the new divisor for the price-weighted index & new divisor for the value-weighted index. Show all work or explain your answers.

Part 2

Suppose immediately after trading close on September 16h, you decide to immediately replace Moderna with Pfizer in your index.

1. Determine the new divisor for price-weighted index. Show all work.

Determine the new divisor for value-weighted index. Show all work.

Answer rating: 100% (QA)

Part I Priceweighted index Index Value Price of Merck Price of JJ Price of Moderna Divisor Index Val... View the full answer