Purpose of the homework:

$1.$ Students will learn the composition of Dow Jones Industrial Average $($DJIA$)$

$2.$ Students can learn how this blue$-$chip stock index is calculated.

Assignment:

This is an easy warm$-$up exercise. From the Market Lineup of the Wall Street Journal $($Page C$2),$ you can find the Dow $30$ components. When you add up the net point change of the day and divide the sum by the Divisor $(0\mathrm{.}12493117$ as of $10/3/2006),$ you should get the change in the DJIA for that day. Please make sure that you use the current divisor in the calculation.

The assignment asks you to obtain the closing prices for two consecutive days for each stock in the Dow $30.$ You then calculate the DJIA for each day by adding up the prices of all $30$ components and dividing the sum by the Divisor. Next, you calculate the price change for each stock and add up the price changes and divide the sum by the Divisor. The result should be the change in the DJIA for these two days. You also need to collect the actual closing DJIA for these two days and compare with the result of your calculation.

You should choose any two consecutive days. You are advised to use the sample spreadsheet for this assignment.

Information Source:

You can obtain the components and historical indices of the Dow $($DJIA$)$ from the Yahoo Finance website. To get the prices of the Dow components, you should go to the summary page of the Dow $($DJIA$).$ You can find the $$Components$$ on the left menu. Once you are on the component page, you can download the prices of all components to a spreadsheet by clicking on the $$Download$$ button. Remember to do it after the end of market so you can get the closing prices.