P3.2 Imagine that the Mini-Dow Average (MDA) is based on the closing prices of five stocks. The
Question:
P3.2 Imagine that the Mini-Dow Average (MDA) is based on the closing prices of five stocks. The divisor used in the calculation of the MDA is currently 0.765. The closing prices for each of the five stocks in the MDA today and exactly a year ago, when the divisor was 0.790, are given in the accompanying table. Closing Stock Price Stock Ace Computers Today One Year Ago $65 $74 Coburn Motor Company 37 34 National Soap & Cosmetics 110 96 Ronto Foods 73 72 Wings Aircraft 96 87
a. Calculate the MDA today and that of a year ago.
b. Compare the values of the MDA calculated in part a and describe the apparent market behavior over the last year. Was it a bull or a bear market?
Step by Step Answer:
Fundamentals Of Investing
ISBN: 9780136117049
11th Edition
Authors: Lawrence J. Gitman, Michael D. Joehnk, Scott B. Smart, Scott J. Smart