Lindsay Kelly bought 100 shares of Google, 300 shares of Microsoft, and 500 shares of Nokia in

Question:

Lindsay Kelly bought 100 shares of Google, 300 shares of Microsoft, and 500 shares of Nokia in January 2005. The adjusted close prices of these stocks over the next three years are shown in the accompanying table.

Year Google Microsoft Nokia 2005 195.62 24.11 13.36 2006 432.66 26.14 16.54 2007 505.00 28.83 19.83 Source: http://finance.yahoo.com .

a. Compute and interpret the unweighted aggregate price index for Lindsay's portfolio, using 2005 as the base year.

b. Compute and interpret the corresponding weighted price index using the Laspeyres approach.

c. Why are the results from parts a and b so different?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: