Consider a hypothetical price-weighted index created using the three stocks below:

Stock	Price before split	Price after split	Outstanding Shares (mil) before split	Outstanding Shares (mil) after split
X	$10	$10	400	400
Y	$40	$40	100	100
Z	$200	$50	10	40

Yesterday before market close, Stock Z has completed a 4-for-1 split. Prices before and after the split are listed above. Before the split, you were holding 100 shares of each of the stocks.

After Stock Z’s 4-for-1 split, you realize that you need to adjust the portfolio so that it can stay price-weighted. To do so, you will need to [ Select ] ["buy", "sell"] [ Select ] ["20", "30", "50"] shares of Stock X, [ Select ] ["buy", "sell"] [ Select ] ["15", "20", "30"] shares of Stock Y, and [ Select ] ["buy", "sell"] [ Select ] ["30", "40", "60"] shares of Stock Z.

Right before Stock Z’s split, the divisor of the price-weighted index is 3. After the split, the new divisor is [ Select ] ["1.2", "2.6", "3", "4.2"] .

Answer rating: 100% (QA)

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