Fin 315 Practice Problems Dow, S&amp;P, short ratio.pdf - Fin 315 Practice Problems 1 Charles Dow’s stock market average first appeared in the

# Fin 315 Practice Problems Dow, S&P, short ratio.pdf -...

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Fin 315 Practice Problems 1. Charles Dow’s stock market average first appeared in the Customer’s Afternoon Letter on July 3, 1884. Suppose that the 11 stock prices for the companies in his market average were as follows on July 3, 1884: \$15, \$12, \$30, \$15, \$14, \$60, \$48, \$12, \$45, \$20, \$30. Now, suppose that the company selling for \$60 had a 2 for 1 split. Find the new divisor for the Dow that becomes effective the next day (on July 4). Answer: _______________ 2. Suppose that you own one share of each of the 30 companies in the Dow. The Dow rose by 79.40 on a recent Monday and closed at 27601.27. The divisor is 0.1259270. By how much did your portfolio of 30 stocks rise in value on Monday? Answer: \$_______________ 3. Boeing rose by \$5.00 per share on the recent Monday when the Dow closed at 27601.27 and the divisor was 0.1259270. Where would the Dow have closed on that Monday if Boeing had instead fallen by \$5 per share? Answer: _______________
4. Suppose that the Dow Jones Corporation decides to remove Intel from the Dow Jones Industrial Average and replace them with Facebook. Use the closing numbers for the Dow on the recent Monday (questions 2 and 3) to find the new divisor for the Dow.

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