QUESTION 1

You are given the following information concerning two stocks that make up an index. Assume that the divisor is 2. What is the percentage return for the price-weighted index?

	Shares Outstanding	Beginning of Year Price	End of year Price
Kirk, Inc	45,000	$81	91
Picard C.	60,000	41	47

2 points

QUESTION 2

Suppose there are only two stocks in the market and the following information is given:

	Shares Outstanding	Beginning of Year Price	End of year Price
Ally Co.	100 million	$60	$66
McBeal, Inc.	400 million	126	100

Suppose that McBeal splits 3-for-1. Based on beginning information, what is the new divisor? (Note: Before the split, the divisor is 2. Round your answer to four decimal places.)

2 points

QUESTION 3

You are given the following information concerning two stocks that make up an index. What is the percentage value-weighted return for the index?

	Shares Outstanding	Beginning of Year Price	End of year Price
Kirk, Inc.	41,000	$88	$93
Picard Co.	63,000	44	54

2 points

QUESTION 4

You are given the following information concerning two stocks that make up an index. Assume the value-weighted index level was 419.59 at the beginning of the year. What is the index level at the end of the year?

	Shares Outstanding	Beginning of Year Price	End of year Price
Kirk, Inc.	40,000	$84	$90
Picard Co.	56,000	42	46

2 points

QUESTION 5

On August 30, 2010, the DJIA closed at 10,456.74. The divisor at that time was 0.12015025. What would the new index level be if all stocks on the DJIA increased by $3.00 per share on August 31, 2010?