# Question: There are three stocks in a price weighted index A 100 B 20 C 60 a What is

There are three stocks in a price-weighted index:

A... .. $100

B... .. 20

C... .. 60

a. What is the average value for the index?

b. Assume stock A goes down by 25 percent and stock B goes up by 25 percent, and stock C remains the same. What is the new average value for the index?

c. Explain why in part b the average changed with two stocks moving up and down by the same percentage amount.

A... .. $100

B... .. 20

C... .. 60

a. What is the average value for the index?

b. Assume stock A goes down by 25 percent and stock B goes up by 25 percent, and stock C remains the same. What is the new average value for the index?

c. Explain why in part b the average changed with two stocks moving up and down by the same percentage amount.

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