There a 4 stocks that make up an index:

Stock Price Number of Shares Outstanding

R $10 100,000

S 20 10,000

V 30 200,000

P 40 50,000

If the price of Stock P goes from $40 to $15. What is the percentage decrease in the index if it is value-weighted?

Group of answer choices

-12.73%

-14.22%

-15.22%

-8.15%

-13.59%

A valueweighted average of stock prices considers not only the price of the stock but also the total value of all shares (i.e., the number of shares outstanding times the price of each share). If a firm has a small number of shares outstanding, the value of these shares plays a smaller role in the determination of a valueweighted index.

Group of answer choices

True

False