The four stocks below are part of an index. Use the information below:

a. Compute a price-weighted index by adding their prices at time t and time t + 1. What is the percentage change in the index?

b. Compute a value-weighted index by adding their market values at time t and time t + 1. What is the percentage change in the index?

c. Why is there a difference between your answers to (a) and (b)?

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# Of Shares Price at Price at Time (1) Time (t + 1) Stock Outstanding Eeny 100 10 15 50 Meeny 20 22 Miney 50 30 28 Moe 20 40 42