a) Consider a price-weighted index with only three stocks. If the stock prices are Ghs20, Ghs 30, and GHs 40 and the divisor is 3.0, what is the index level? If the Ghs 40 stock does a 2-for-1 split to Ghs 20, calculate the new divisor.

b) Find below a market value-weighted index, with only three stocks. Each stock originally sold 100 shares at GHs 30. Assuming the base index value is 100, what is the value of the index? What happens when the 80 stock has a 2-for-1 stock split?

Stock	Price (GHs)	Share Outstanding
A	40	300
B	60	200
C	80	100

Answer rating: 100% (QA)

Sure lets start with part a for the priceweighted index a Initially the index level is calculated ... View the full answer