You are given the following information regarding prices for a sample of stocks.

PRICE

Stock Number of Shares T T+1

A 1,000,000 60 80

B 10,000,000 20 35

C 30,000,000 18 25

a. Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1.

b. Construct a value-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1.

c. Briefly discuss the difference in the results for the two indexes.