Consider a price-weighted index of the following three stocks: Stock Price per share on day 0...

  

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Consider a price-weighted index of the following three stocks: Stock Price per share on day 0 Shares outstanding (millions) A B C 80 120 200 40 10 2 a) Suppose that we construct the price-weighted index on day 0. What is the current index level? b) On day 0, stock B splits three for one so that its share price becomes $40 and the number of shares outstanding becomes 30 millions. What should be the new divisor for the index? e) Following are stock prices on day 1. Stock Price per share on day 1 Shares outstanding (millions) A 88 40 B 36 30 C 2 190 What is the index level on day 1? What is the return on the stock index from day 0 to 1? Consider a price-weighted index of the following three stocks: Stock Price per share on day 0 Shares outstanding (millions) A B C 80 120 200 40 10 2 a) Suppose that we construct the price-weighted index on day 0. What is the current index level? b) On day 0, stock B splits three for one so that its share price becomes $40 and the number of shares outstanding becomes 30 millions. What should be the new divisor for the index? e) Following are stock prices on day 1. Stock Price per share on day 1 Shares outstanding (millions) A 88 40 B 36 30 C 2 190 What is the index level on day 1? What is the return on the stock index from day 0 to 1?