Price-Weighted Index

Example 1:

Stock Price Before Split Price After Split

A 30 10

B 20 20

C 10 10

Index ( ) / 3 = 20 ( ) / X = ( )

Divisor 3 X = ( )

Example 2:

Stock P before Replacement P after Replacement

GM 40.56 40.56

Nordstrom 25.91 25.91

Lowes 53.68 Home Depot 32.90

Index ( ) / 3 = ( ) ( ) / X = ( )

Divisor 3 X = ( )

Example 3:

Stock Period T Case A (T+1) Case B (T+1)

A 100 110 100

B 50 50 50

C 30 30 33

Sum 180 190 183

Divisor 3 3 3

Index 60 ( ) ( )

Percentage Change ( )% ( )%

Example 4:

A price-weighted index consists of the following four stocks. The current index divisor is 3.39. What will the new divisor be if stock D does a 3-for-2 stock split?

Stock Price Before Split Price After Split

A $31 31

B $18 18

C $26 26

D $54 ( )