On December 31, 2019, you decided to look at a price-weighted index of the four stocks known as "FANG" stocks - Facebook, Amazon, Netflix, and Alphabet (Google). Use the information provided in the table below to answer the following questions.

 

a) Calculate the return on Alphabet (GOOG) from 12/31/2019 to 12/31/2020. 

b) Calculate the return on a price-weighted index of these four stocks from 12/31/2019 to 12/31/2020.

c) After reading a series of posts on Reddit, you decide to update your price-weighted index by replacing Alphabet (GOOG) with GameStop (GME). As of 12/31/20, GameStop had 70m shares outstanding and a closing stock price of $19 per share. What is the new divisor that would be required in your price-weighted index if you replace Alphabet with GameStop after the close of trading on 12/31/20?  

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Ticker FB AMZN NFLX GOOG Shares Outstanding 2,800m 500m 450m 680m December 31, 2019 Price $205 $1,848 $324 $1,337 Market Value $574.0b 924.0b $145.8b $909.2b December 31, 2020 Price $273 $3,257 $541 $1,752 Market Value $764.4b $1,628.5b $243.5b $1,191.4b Return 33.2% 76.2% 67.0% ?? Ticker FB AMZN NFLX GOOG Shares Outstanding 2,800m 500m 450m 680m December 31, 2019 Price $205 $1,848 $324 $1,337 Market Value $574.0b 924.0b $145.8b $909.2b December 31, 2020 Price $273 $3,257 $541 $1,752 Market Value $764.4b $1,628.5b $243.5b $1,191.4b Return 33.2% 76.2% 67.0% ??

Answer rating: 100% (QA)

To calculate the return on Alphabet GOOG from 12312019 to 12312020 we need the price change and the ... View the full answer