Question
) Assume that the DJIA closed at 10,875 one day recently, and the divisor was 0.158393117. a. What is the sum of the prices of
) Assume that the DJIA closed at 10,875 one day recently, and the divisor was 0.158393117. a. What is the sum of the prices of the 20 stocks in the index, given this information? b. Assume that one stock in the index, Walmart, moved $14.40 that day, while the index itself moved about 105 points. What percentage of the total movement in the DJIA that day was accounted for by the movement in Walmart? c. Now assume that one of the 20 stocks had an initial price of $47.50 and the same stock had a 4-for-1 stock split that day. What would the new divisor have to be to keep the index unchanged at 10,875? (5 marks)
Q10) Assume that you construct a price weighted index of 30 stocks. The sum of the prices of these stocks is $2000. The divisor for this index is 30, and the value of this index is 100. Now assume that one of the 30 stocks, with an average price of $100, has a three-for-one stock split while the value of other stocks remains unchanged. (2 marks) a) If you make no adjustments to the index, what will be the new value of the index? b) What does the new divisor have to be to keep the value of the index unchanged at 100?
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