QUESTION ONE $(20$ MARKS$)$

a$.$ How different is a value$-$weighted index from a price$-$weighted index. $(5$ Marks$)$

b$.$ Suppose there are only two stocks on the market and the following information is given. The beginning Index value is $100.$

$\backslash$table$[[$Stock$,$Shares Outstanding,Price Per Share GHC$],[,,$Beginning of Year,End of Year$],[$Nexus Technologies,$70$ million,$4\mathrm{.}5,5\mathrm{.}2],[$Meridian Solutions,$180$ million,$8,7\mathrm{.}6]]$

i$.$ Construct price$-$weighted index and calculate the percentage change $(3$ Marks$)$

ii$.$ Construct value$-$weighted index and calculate the percentage change $(3$ Marks$)$

iii. What is the purpose of a divisor? $(2$ Marks$)$

iv$.$ Suppose Meridian Solutions splits $2-$for$-1.$ What is the new divisor? $(2$ Marks$)$

c$.$ Explain the key differences between fundamental and technical analysis in evaluating investments. $(5$ Marks$)$

d$.$ Consider a market with three investors and two stocks. Investor A owns $60\%$ of stock X and $25\%$ of stock I Inves $15\%$ of stock X and $40\%$ of stock Y$.$ Investor C owns the remalilite of both stocks.

i$.$ If the total market capitalization of stock X is GHC $85$ million and stock Y is GHC $140$ million, calculate the total portfolio value for each investor. $(3$ Marks$)$