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Unformatted text preview: c. Calcuate the stock price above which you would receive a margin call on this transaction. 3. PriceWeighted Average. Consider the following information: Stock P0 P1 Shares Initial Value Final Value A 25 30 20 500 600 B 100 90 1 100 90 a. Calculate the initial value of the priceweighted index (where the initial divisor equals b. Calculate the final value of the priceweighted index (where the initial divisor equals 2). c. Assume now that Stock B splits 2 for 1. (1) What is the postsplit price of Stock B? (2) Calculate the new divisor for the priceweighted stock index following the stock split. (3) Calculate the new priceweighted index value following the stock split. (4) Explain briefly why the divisor changed. 4. Explain briefly why valueweighted indexes might be considered superior to priceweighted indexes....
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This note was uploaded on 09/27/2010 for the course BUSINESS 6F:111 taught by Professor Tongyao during the Spring '09 term at University of Iowa.
 Spring '09
 TongYao
 Management, Balance Sheet

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