Question: The following table gives information about the five stocks that

The following table gives information about the five stocks that have traded on the Small Investors Stock Exchange (SISE) since it started two years ago:


None of the stocks pays a dividend.
a. Using all of the stocks, construct a simple price-weighted market index and compute the market returns for each year.
b. Using all of the stocks, construct a value-weighted market index and compute the market returns for each year.
c. Explain why the returns computed in parts (a) and (b) are notidentical.
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  • CreatedNovember 24, 2014
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