The four stocks below are part of an index. Using the information below:

1. Compute a price-weighted index by adding their prices at time t and time t + 1. What is the percentage change in the index?
2. Compute a value-weighted index by adding their market values at time t and time t + 1. What is the percentage change in the index?
3. Why is there a difference between your answers to (a) and (b)?

STOCK

# OF SHARES OUTSTANDING

PRICE AT TIME (t)

PRICE AT TIME (t + 1)

Eeny

100

10

15

Meeny

50

20

22

Miney

50

30

28

Moe

20

40

42