You have decided to create stock market indexes using three representative stocks. At the end of day
Question:
You have decided to create stock market indexes using three representative stocks. At the end of day one, stock X has a price of $20 per share and 20 million shares outstanding, stock Y has a price of $25 per share and 50 million shares outstanding, and stock Z has a price of $35 per share and 40 million shares outstanding. You calculate a price-weighted index and a market capitalization-weighted index. You have decided that the beginning value of each index at the end of day one will be 100. What is the value of each index at the end of day two if stock X’s price is $23 per share, stock Y’s price is $22 per share, and stock Z’s price is $36 per share?
Step by Step Answer:
Financial Institutions, Markets And Money
ISBN: 1704
12th Edition
Authors: David S. Kidwell, David W. Blackwell, David A. Whidbee, Richard W. Sias