Question: Based on the information provided below, complete the table below and answer the following questions: Stocks of AA, BB, and CC, initially priced at $25,

  1. Based on the information provided below, complete the table below and answer the following questions:
    1. Stocks of AA, BB, and CC, initially priced at $25, $40, and $63, respectively, comprise price-weighted with a base value of 100 (Year 0). One year later the stocks AA, BB. And CC was valued at $30, $38, and $68, respectively. Firms AA, BB, and CC have 10 million, 5 million, and 3 million shares outstanding, respectively. What was the value of the price-weighted index at the end of year one?
    2. Suppose that the firms' stocks comprise a market value-weighted index with a base value of 100 (Year 0). What was the value of the market-weighted index at the end of year one, assuming the numbers of shares outstanding do not change.

Year 0

Year 1

Shares Outstanding

Price

Market Value ($ in Millions)

Price

Market Value ($ in Millions)

Stock AA

Stock BB

Stock CC

Total

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