Imagine that the Mini-Dow Average (MDA) is calculated by adding up the closing prices of five stocks and dividing that sum by a divisor. The divisor used in the calculation of the MDA is currently

0.775.

The closing prices for each of the five stocks in the MDA today and exactly 1 year ago, when the divisor was

0.815,

are given in the following table:

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.

a. Calculate the percentage change in each stock. Based on this, is your sense that the market is bullish or bearish?

b. Calculate the MDA today and that of a year ago and calculate the percentage of change in the MDA. Based on this does the market appear to be bullish or bearish?

c. Compare your answers to parts (a) and (b) above. Did you reach the same conclusion about the direction of the overall market? What role did the divisor play in terms of the conclusion you reached in part

b?

Stock Today 1 Year Ago Ace Computers 64.08 63.96 Coburn Motor Company 38.97 34.67 National Soap & Cosmetics 90.67 94.56 Ronto Foods 66.71 73.57 Wings Aircraft 84.76 87.42