Question
A financial analyst gathered the following information relating to three shares, A, B and C: Share price (Sh.) Number of outstanding shares Share 31 December
A financial analyst gathered the following information relating to three shares, A, B and C:
Share price (Sh.) Number of outstanding shares
Share 31 December 2016 31 December 2017 31 December 2016 31 December 2017
A 30 25 1,000,000 1,000,000
B 25 30 8,000,000 8,000,000
C 20 20 5,000,000 5,000,000
Required:
(i) Price weighted average as at 31 December 2016. (1 mark)
ii)Value weighted average as at 31 December 2016. ( marks)
(iii) Geometric average as at 31 December 2016. (1 mark)
(iv) Value weighted average as at 31 December 2017. (3 marks)
V)Geometric average as at 31 December 2017. (1 mark)
(vi) Using the results obtained in (ii) to (v) above, explain why the values of the weighted average and the geometric average are different. (1 mark)
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