Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

38. Global Stock Index is a value weighted index with just 2 stocks in the index: ABC stock and XYZ stock. (a) ABC ended 2005

image text in transcribed
38. Global Stock Index is a value weighted index with just 2 stocks in the index: ABC stock and XYZ stock. (a) ABC ended 2005 at a price of $55 and had 1 million shares outstanding. XyZ stock ended 2005 at a price of $32 and had 4 million shares outstanding. ABC ended 2006 at a price of $58. XYZ stock closed at $35 for 2006. If the base value of Global Stock Index in 2005 was 100, what was its value in 2006 if the index is value-weighted? (b).Consider the information in part (a) for the Global Stock Index, and assume that the index is a price-weighted one instead. Calculate the index's rate of return (% change in value during 2006) in this case

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions