The Trio Index is comprised of three stocks, Eins, Zwei, and Tri.

Their current prices are listed below.

STOCK PRICE AT TIME ( t )

Eins $10

Zwei $20

Tri $40

a. Between now and the next time period, the stock prices of Eins

and Zwei increase 10 percent while Tri increases 20 percent.

What is the percentage change in the price-weighted Trio Index?

b. Suppose instead that the price of Eins increases 20 percent

while Zwei and Tri rise 10 percent. What is the percentage

change in the price-weighted Trio Index? Why does it differ

from the answer to part a?