Stock Today Ago

Ace Computer $64 $65

Coburn Motor $39. $34

National Soap $89. $95

Ronto Food $69 $ 72

Wings Aircraft $86 $88

Imagine that the Mini-Dow Average (MDA) is based on the closing prices of stocks. The divisor used in the calculation of the MDA is currently 0.775. The closing prices for each of the 5 stocks in the MDA today and exactly 1 years ago, when the divisor was 0.815, are given in the accompanying table.

Imagine that the Mini-Dow Average (MDA) is based on the closing prices of stocks. The divisor used in the calculation of the MDA is currently 0.775. The closing prices for each of the 5 stocks in the MDA today and exactly 1 years ago, when the divisor was 0.815, are given in the accompanying table.

1. Calculate the percentage change in each stock. Based on this, is your sense the market is bullish or bearish?
2. Calculate the MDA today and that of a year ago and calculate the percentage change in the MDA. Based on this, does the market appear to be bullish or bearish ?

1. Compare your answers to parts a and b above. Did you reach the same conclusion about the direction of the overall market? What role did the divisor play in the terms of the conclusion you reached in part b?