Question: An analyst considers different indices that could be constructed from stocks A, B, and C given the information below. In particular, the analyst considers all
An analyst considers different indices that could be constructed from stocks A, B, and C given the information below. In particular, the analyst considers all 6 combinations given by the 3 different weighting methods (value-weighted, equally-weighted, and price-weighted) and the 2 different return definitions (price return, total return).
Which of the 6 indices would yield the highest return for the period? Which of the 6 indices would yield the lowest return?
Stock per Beginning-of- period price End-of-period price # Shares outstanding Dividends throughout period share A 10.00 12.00 100 1.00 B 20.00 20.50 100 0.50 30.00 30.00 200 0.30
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