The Quad Index is comprised of four stocks: Uno, Dos, Tres, and Fore.

a. Given the data below on the number of shares outstanding and their share prices at time (t) and time (t + 1), what is the percentage change in the Quad Index if it is calculated as a price-weighted index? As a value-weighted index?

b. Instead of the prices shown above, suppose we switch the prices for Uno and Fore. That is, Uno’s stock price is $50 at time (t) and it rises to $60 by time (t + 1), and Fore’s stock price rises from $10 to $11 over the same time frame. What is the percentage change in the Quad Index if it is computed as a price-weighted index? As a value-weighted index?

c. Explain similarities or differences in your answers to Parts (a) and (b).

Transcribed Image Text:

# Of Shares Outstanding Price at Price at Stock Time (1) Time (t +1) $11 Uno 1000 $10 Dos 500 20 21 Tres 250 40 42 Fore 100 50 60