6. A benchmark index has three stocks priced at $21, $32, and $45 yesterday. The number of outstanding shares for each is 300,000 shares, 200,000 shares, and 100,000 shares, respectively. If this index is value weighted and had a value of 10.235 yesterday and the prices changed to $23, $31, and $48, what is the new index value? (Hint: First multiply the shares outstanding of each stock by its price to the total market capitalization of each stock. Next, sum up the market capitalizations of all stocks in the index. Then find the market capitalizations of all stocks in the index with the new stock prices. Finally, use the formula: New index value = (New total index market capitalization / Original total index market capitalization) x Original index value.)
6. A benchmark index has three stocks priced at $21, $32, and $45 yesterday. The number of outstanding shares for each is 300,000 shares, 200,000 shares, and 100,000 shares, respectively. If this index is value weighted and had a value of 10.235 yesterday and the prices changed to $23, $31, and $48, what is the new index value? (Hint: First multiply the shares outstanding of each stock by its price to the total market capitalization of each stock. Next, sum up the market capitalizations of all stocks in the index. Then find the market capitalizations of all stocks in the index with the new stock prices. Finally, use the formula: New index value = (New total index market capitalization / Original total index market capitalization) x Original index value.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:6. A benchmark index has three stocks priced at $21, $32, and $45 yesterday. The number
of outstanding shares for each is 300,000 shares, 200,000 shares, and 100,000 shares,
respectively. If this index is value weighted and had a value of 10.235 yesterday and the
prices changed to $23, $31, and $48, what is the new index value? (Hint: First multiply
the shares outstanding of each stock by its price to the total market capitalization of each
stock. Next, sum up the market capitalizations of all stocks in the index. Then find the
market capitalizations of all stocks in the index with the new stock prices. Finally, use the
formula: New index value = (New total index market capitalization / Original total index
market capitalization) x Original index value.)
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