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Use the information below to help answer questions 15-16 An index is constructed Stock A, Stock B, Stock C, Stock D, Stock E The stocks
Use the information below to help answer questions 15-16 An index is constructed Stock A, Stock B, Stock C, Stock D, Stock E The stocks do not pay dividends Shares outstanding do not change Shares Price/Share Price/Share Outstanding T=0 T=1 StockA 20 $ 50.00 $ 60.00 StockB 5 0 $ 40.00 $ 46.00 StockC 6 0 $ 30.00 $ 28.50 StockD 3 0 $ 60.00 $ 66.00 StockE 40 $ 20.00 $ 18.00 This question is worth 2 points! Assume you do not know if the index's return between T=0 and T=1 is calculated using the market weighted method, price weighted method, or equal weighted method. Calculate the return of the index's return using each method. Rank the methods in order of lowest to highest return; lowest highest a) Equal Market Price b) Market Equal c) Price Market Equal d) Price Equal Market e) Market Price Equal Price Assume the index's return is calculated using the market weighted method. Which stock contributed the most to the index's return? HINT: Calculate the absolute period over period change in market capitalization for each stock. a) Stock A b) Stock B c) Stock C d) Stock D e) Stock E
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