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Consider the following information on the stock market in a small economy. Shares Outstanding Price, beginning Price, end of of year Company year 1

Consider the following information on the stock market in a small economy. Shares Outstanding Price, beginning Price, end of of year Company year 1 100 $80 $85 2 1,000 $18 $21 3 10,000 $7 $9 Instructions: Enter your responses rounded to one decimal place. a. Compute a price-weighted stock price index for the beginning of the year and the end of the year. What is the percentage change? The percentage change is 9.5%. b. Compute a value-weighted stock price index for the beginning of the year and the end of the year. What is the percentage change? (Note: The value of a firm is calculated by multiplying the number of its shares by the prices of those shares.) The percentage change is 49.9%.

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