Assignment1_FNA469.pdf - Assignment 1 1(24 points Use data from the table below to answer this question Day 0 Day 1 Price shares Price shares Stock A 9

Assignment1_FNA469.pdf - Assignment 1 1(24 points Use data...

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Assignment 1 1. (24 points) Use data from the table below to answer this question:Day 0 Day 1 Price # shares Price # shares Stock A 9 17,000 7 17,000 B 18 23,000 10 23,000 C 87 9,000 135 9,000 D 42 12,000 60 12,000 a.(8 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 day 0. ii.What is the return on the price-weighted index on day 1? iii.Stock C is split 5-for-1after the close of Day 1. What is the divisor for the price-weighted index afterthe 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 D. Compute the new divisor and the index value after this change to the index composition. b.(8 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 day 0. ii.What is the return on the value-weighted index on day 1? iii.Stock C is split 5-for-1after the 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 C is replaced by Stock D in the value-weighted index, and the new index is computed with only
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