1. Use the chart below to answer the following questions. T = 1 Stock A B...
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1. Use the chart below to answer the following questions. T = 1 Stock A B C Price 18 9 6 T=0 Quantity Price 19 10 8 20 40 40 Quantity T=2 Price Quantity 20 19.6 40 10 40 4 20 40 80 a. Create a value (VW) and price weighted index (PW) using the three stocks. Assume each stock will be in the index and calculate the return of each from t = 1 to t=2. (There should be 2 answers here. b. After the stock split in T2, what would the new divisor of the price weighted index be? c. What is the holding period return for stocks A and B from time 0 to time 2. Assume Stock B has a $5 dividend and the other stocks do not. (Ignore the number of shares for this question only) G25 1 2 3 A 4 B 5 C 6 7 8 9 10 Part A/B 11 Weights 12 13 A Sum 14 B 15 C 16 17 Mkt Index Return 18 Price Index Return 19 20 21 Part C 22 Original Index 23 24 25 A 26 B 27 C 28 Sum 29 30 31 Solution 32 33 34 35 36 27 A Ready 99+ po t=0 : B Mkt Weight X✓ fx 18 New Prices 9 6 33 54.55% 27.27% 18.18% 14.58% 12.12% 11 90 C 8888 20 40 40 100 960 =1 Price Weight pl 42.59% 43.53% 13.88% D 19 10 8 37 Q1 Q2 Q3 Accessibility: Investigate q1 E Q4 Stock Return 20 40 40 1100) 5.556% 11.111% 33.333% p2 Q5 F 19.6 10 4 92 G 100 200 80 H Mkt Cap 2700 2760 Price Weight at t-0 Price Weight at t=1 Short Answer B 880 6340 11 12.33333 + L + M *** N +55 6:57 2/11/20 1. Use the chart below to answer the following questions. T = 1 Stock A B C Price 18 9 6 T=0 Quantity Price 19 10 8 20 40 40 Quantity T=2 Price Quantity 20 19.6 40 10 40 4 20 40 80 a. Create a value (VW) and price weighted index (PW) using the three stocks. Assume each stock will be in the index and calculate the return of each from t = 1 to t=2. (There should be 2 answers here. b. After the stock split in T2, what would the new divisor of the price weighted index be? c. What is the holding period return for stocks A and B from time 0 to time 2. Assume Stock B has a $5 dividend and the other stocks do not. (Ignore the number of shares for this question only) G25 1 2 3 A 4 B 5 C 6 7 8 9 10 Part A/B 11 Weights 12 13 A Sum 14 B 15 C 16 17 Mkt Index Return 18 Price Index Return 19 20 21 Part C 22 Original Index 23 24 25 A 26 B 27 C 28 Sum 29 30 31 Solution 32 33 34 35 36 27 A Ready 99+ po t=0 : B Mkt Weight X✓ fx 18 New Prices 9 6 33 54.55% 27.27% 18.18% 14.58% 12.12% 11 90 C 8888 20 40 40 100 960 =1 Price Weight pl 42.59% 43.53% 13.88% D 19 10 8 37 Q1 Q2 Q3 Accessibility: Investigate q1 E Q4 Stock Return 20 40 40 1100) 5.556% 11.111% 33.333% p2 Q5 F 19.6 10 4 92 G 100 200 80 H Mkt Cap 2700 2760 Price Weight at t-0 Price Weight at t=1 Short Answer B 880 6340 11 12.33333 + L + M *** N +55 6:57 2/11/20
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Answer rating: 100% (QA)
Answer a The value weighted index VW can be calculated by taking the weighted average of the stock p... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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