Question: 8.1 (25 marks total) a. Identify the current composition of the Dow Jones Industrial Average (DJIA), a price-weighted index. List the stocks included, the exchange

8.1 (25 marks total)

a. Identify the current composition of the Dow Jones Industrial Average (DJIA), a price-weighted index. List the stocks included, the exchange on which they are currently listed, and their ticker symbols. (5 marks)

b. Prepare a mini-Dow price index from a subset of the DJIA stocks using the following instructions:

Get stock price data (e.g., the daily closing price) from a site like finance.yahoo.com for 10 stocks in the DJIA. Record the prices for the prior 10 trading days, and use these prices to compute a price-weighted index for each of these 10 days by adding up the prices of your 10 stocks each day. (10 marks)

Also record the closing value of the DJIA for the same 10 days.

Chart and compare the performance of your mini-Dow index versus the DJIA over these 10 trading days(use a table, a graph, or another appropriate method), using the values you calculated above. Note that the scale for the two indexes will have to be adjusted to record the actual values on a graph, but a daily return graph (stated in percentages), would already be on the same scale. (5 marks)

Comment on the differences in performance over this time. How closely do they follow one another? Are the daily returns similar? Are the returns similar overall?

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