Question: Hi please help to answer this question and all the parts You want to create a price-weighted index consisting of the following three stocks. At

Hi please help to answer this question and all the parts

Hi please help to answer this question and all the parts You

You want to create a price-weighted index consisting of the following three stocks. At t=0, you arbitrarily set the initial value of the index at 100 . \begin{tabular}{|c} A \\ \hline S \\ \hline \end{tabular} (a) Given a (hypothetically) same percentage change in price - e.g., 1\% - which stock will have the greatest impact on the value of index? Why? Explain in words. (2 marks) (b) Define a divisor as a constant that divides the sum of the three prices (price of A+ price of B+ price of C ) to reach the index value. What is the value of the divisor at t=0 ? (2 marks) (c) Compute the price-weighted index value at t=1 (Round the index value to two decimal places). What is the monthly percentage return on the index from t=0 to t=1 ? (4 marks) (d) Now consider a 3-for-1 stock split for stock C in September, t=1. That is, each old share of stock C becomes 3 new shares while the price per share is only one third of $108. What is the new value of the divisor? (Round it to four decimal places)

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