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.