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Dr. Lin asks you to construct a stock market index called LINDEX. LINDEX aims to measure the overall performance of the following 2 stocks: Stock
Dr. Lin asks you to construct a stock market index called "LINDEX". LINDEX aims to measure the overall performance of the following 2 stocks: Stock X is trading at $50 today, and has 20 shares outstanding. Stock Y is trading at $200 today, and has 5 shares outstanding. Suppose Stock X goes up by 2% and Stock y goes down by 3% from their current prices. 1. If LINDEX is price-weighted, how much will it go up (or down)? This should be measured in percentages. 2. If LINDEX is value-weighted, how much will it go up (or down)? Again this should be measured in percentages
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