Question
An index consists of the following securities. What is the ending value-weighted index? You can assume the beginning value of the index as 1,000 units.
An index consists of the following securities. What is the ending value-weighted index? You can assume the beginning value of the index as 1,000 units.
Stock | # of shares | Beginning Price | Ending Price |
Fly High | 1,200 | $250 | $280 |
Drive By | 750 | $550 | $530 |
Ride In | 2,000 | $55 | $70 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the ending valueweighted index we first need to calculate the total market value of these stocks at both the beginning and the end Heres how we can do it Stock of shares Beginning Price Beginning Market value Ending Price Ending Market value Fly High 1200 250 1200 250 300000 280 1200 280 336000 Drive By 750 550 750 550 412500 530 750 530 397500 Ride In 2000 55 2000 55 110000 70 2000 70 140000 Beginning total market value 300000 Fly High 412500 Drive By 110000 Ride In 822500 Ending total market value 336000 Fly High 397500 Drive By 140000 Ride In 873500 Next we use these values to calculate the return on the value weighted index Return Ending total market value Beginning total market value 1 873500 822500 1 0062 This return value is in decimal form so if we multiply it by 100 we get a return rate in percentage So the return rate is 62 If the beginning value of the ...
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Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
