Air Lines American AirLines (AAL) Delta Air Lines (DAL) Southwest Airlines (SAL) t=0 Closing Price PO...

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Air Lines American AirLines (AAL) Delta Air Lines (DAL) Southwest Airlines (SAL) t=0 Closing Price PO (USD) 90 50 100 Closing Price P1 (USD) 95 45 110 Shares outstanding Q (million) 100 200 200 The share prices of American Airlines Group Inc. (AAL), Delta Air Lines Inc. (DAL), and Southwest Airlines Co. (SAL) for March 28, 2022 are listed here under "Prev. Price" and for April 28, 2022 under "Price". The shares outstanding on March 28, 2022 for each company are listed under "Shares". Prices observations listed are at the close and any adjustments also are assumed to occur at the close of the relevant day. An Airlines index is established starting on March 28, 2021. The information from the above companies is used to create an "AIR3" index. Answer the following questions for each of three possible indexes: AIR3VW, AIR3PW, and AIR3EW (value-weighted, price-weighted, and equal-weighted). Choose a divisor to set the initial index value equal to 100 in each of the three index cases. (a) Calculate the index values for each of the three cases (value-weighted, price-weighted, and equal-weighted) at the close on March 28. Obtain the divisor on March 28, 2021 for each of the three cases. (b) What are the monthly returns based on each of the possible indexes? You establish an ETF with $20,000 initial investment at the close on March 28 that promises to track exactly the AIR3 index (c) What is the composition of your ETF's portfolio in terms of the number of shares held of each asset for each of the three possible AIR3 index choices? (d) What is the final US dollar market value of the ETF (at the close on April 28) for each of the three index types? Air Lines American AirLines (AAL) Delta Air Lines (DAL) Southwest Airlines (SAL) t=0 Closing Price PO (USD) 90 50 100 Closing Price P1 (USD) 95 45 110 Shares outstanding Q (million) 100 200 200 The share prices of American Airlines Group Inc. (AAL), Delta Air Lines Inc. (DAL), and Southwest Airlines Co. (SAL) for March 28, 2022 are listed here under "Prev. Price" and for April 28, 2022 under "Price". The shares outstanding on March 28, 2022 for each company are listed under "Shares". Prices observations listed are at the close and any adjustments also are assumed to occur at the close of the relevant day. An Airlines index is established starting on March 28, 2021. The information from the above companies is used to create an "AIR3" index. Answer the following questions for each of three possible indexes: AIR3VW, AIR3PW, and AIR3EW (value-weighted, price-weighted, and equal-weighted). Choose a divisor to set the initial index value equal to 100 in each of the three index cases. (a) Calculate the index values for each of the three cases (value-weighted, price-weighted, and equal-weighted) at the close on March 28. Obtain the divisor on March 28, 2021 for each of the three cases. (b) What are the monthly returns based on each of the possible indexes? You establish an ETF with $20,000 initial investment at the close on March 28 that promises to track exactly the AIR3 index (c) What is the composition of your ETF's portfolio in terms of the number of shares held of each asset for each of the three possible AIR3 index choices? (d) What is the final US dollar market value of the ETF (at the close on April 28) for each of the three index types?

Answer rating: 100% (QA)

For the composition of the ETFs portfolio we can use the index weights calculated in part a and mult... View the full answer