Question

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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