Use data from the table below to answer this question:

Day 0 Day 1

Price # shares Price # shares

Stock

A 420 17,000 450 17,000

B 180 23,000 165 23,000

C 1,000 9,000 1,350 9,000

D 45 12,000 60 12,000

Note: the columns, #shares, on day 0 and day 1 indicate the total share outstanding for each stock.

Suppose we want to construct indices using all four stocks above, and we choose the divisor on day 0 to be 1.

1. Calculate the index level for price-weighted, value-weighted, and equal-weighted indices at day 0 and day 1.

2. After the market is close by the end of day 1, company C announces a 2.5 for 1 stock split, will there be any influence on each index? Explain.