Assignment 1: Due 2-14-2017
Total Points = 100
Work in groups of up to four
students. You can form groups across sections.
Please upload a copy of your assignment on Canvas and submit hard copies at the start of
class.
1. (30 points) Use data from the table below to answer this question:Day 0Day 1Price# sharesPrice# sharesStockA252,000212,000B458,000488,000C406,000426,000D1010,0001410,000a.( 9 points) The price-weighted index on day 0 is computed with only the three stocks A, B and C. The index value on day 0 is 100. i.Compute the divisor on days 0 and 1.
ii.What is the return on the price-weighted index on day 1?
iii.Stock C trades ex-split with a 2-for-1 split after the close on Day 1. What is the divisor for the price-weighted index after the split?
iv.After the close of market on Day 1, Stock C is replaced by Stock D in the price-weighted index, and the new index is computed with only Stocks A, B and DCompute the new divisor and the index value after this change to the index composition.
.
b.(9 points) The value-weighted index on day 0 is computed with only the three stocks A, B and C. The index value on day 0 is 100. i.Compute the divisor on days 0 and 1.
ii.What is the return on the value -weighted index on day 1?
1

iii.Stock C trades ex-split with a 2-for-1 split after the close of Day 1. What is thedivisor for the value-weighted index after the split?