1
Assignment 1: Due 10 AM on 2-15-2018
Total Points = 100
Work in groups of up to four students. You can form groups across sections. To set
up your group on Canvas, do the following; Go to the
“
People
”
folder and click on the
“
Assignment 1 Group
”
tab. You will see Group 1 through Group 30 listed there. Pick any
empty group and enter the names of the students in your group.
Please upload a copy of your assignment on Canvas by 10 am, and submit hard
copies at the start of class.
1.(Total of 30 points) Use data from the table below for this question: Day 0 Day 1 Price # shares Price # shares Stock A 25 2,000 22 2,000 B 52 4,000 48 4,000 C 38 12,000 42 12,000 D 10 10,000 14 10,000 a.( 8 points) Price-Weighted index: The price-weighted index on day 0 is computed with only three stocks: stocks A, B and C. The index value on day 0 is 100. i.Compute the divisors on days 0 and 1. ii.What is the return on the price-weighted index on day 1? iii.Stock A trades ex-split with a 2-for-1 split after market 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 A is replaced by Stock D in the price-weighted index, and the new index is computed with only Stocks B, C and D. Compute the new divisor and the index value after this change to the index composition.b.(8 points) Value-Weighted index: The value-weighted index on day 0 is computed with only with only three stocks:stocks A, B and C. The index value on day 0 is 100. i.Compute the divisors on days 0 and 1. ii.What is the return on the value -weighted index on day 1? iii.Stock A trades ex-split with a 2-for-1 split after market close of Day 1. What is the divisor for the value-weighted index after the split? iv.After the close of market on Day 1, Stock A is replaced by Stock D in the value-weighted index, and the new index is computed with only Stocks B, C and D. Compute the new divisor and the index value after this change to the index composition.