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You decide to construct a stock index using 3 stocks. End of trading day prices are listed for each stock as follows: Day 1 Day
You decide to construct a stock index using 3 stocks. End of trading day prices are listed for each stock as follows: Day 1 Day 2 Price #shares Price # shares Stock X $20.00 100 $20.50 ? Stock Y $65.00 $35.00 ? Stock Z $100.00 15 $120.00 ? Day 3 Price #shares $19.00 ? $37.50 ? $95.00 ? 60 At 4:01pm on day 1, Stock Y experiences a 2:1 split At 4:01pm on day 2, Stock Z declares a 10% stock dividend a) For a price-weighted index of stocks X, Y, and Z, calculate the index values for each of the three days, and the rate of return for each period (5 marks) b) For a value-weighted index of stocks X, Y and Z, and setting the index to a value of 100 on day 1, calculate the index values for days 2 and 3, and the rate of return for each period (4 marks) c) Which stock is most influential on the price-weighted index? and which is most influential on the value-weighted index? (1 mark) You decide to construct a stock index using 3 stocks. End of trading day prices are listed for each stock as follows: Day 1 Day 2 Price #shares Price # shares Stock X $20.00 100 $20.50 ? Stock Y $65.00 $35.00 ? Stock Z $100.00 15 $120.00 ? Day 3 Price #shares $19.00 ? $37.50 ? $95.00 ? 60 At 4:01pm on day 1, Stock Y experiences a 2:1 split At 4:01pm on day 2, Stock Z declares a 10% stock dividend a) For a price-weighted index of stocks X, Y, and Z, calculate the index values for each of the three days, and the rate of return for each period (5 marks) b) For a value-weighted index of stocks X, Y and Z, and setting the index to a value of 100 on day 1, calculate the index values for days 2 and 3, and the rate of return for each period (4 marks) c) Which stock is most influential on the price-weighted index? and which is most influential on the value-weighted index? (1 mark)
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