A price-weighted index comprises of 3 stocks A, B, and C. The beginning of year prices of 3stocks are $25, $30, and $65, respectively. The end of year prices of 3 stocks are $20, $23, and$86, respectively. What is the return on the price-weighted index over the year?Select one: Consider the following data concerning the expected return and standard deviation of a stock Aand a stock B with a correlation of 0.5.ExpectedReturn StandardDeviationStock A16%20%Stock B10%15%A new portfolio is formed with 25% invested in A and 75% invested in B. Determine the expectedreturn of the new portfolio.

Since you have provided two different snips with two different questions, it possible to solve to…

A price-weighted index comprises of 3 stocks A, B, and C. The beginning of year prices of 3 stocks are $25, $30, and $65, respectively. The end of year prices of 3 stocks are $20, $23, and $86, respectively. What is the return on the price-weighted index over the year?

A price-weighted index comprises of 3 stocks A, B, and C. The beginning of year prices of 3 stocks are $25, $30, and $65, respectively. The end of year prices of 3 stocks are $20, $23, and $86, respectively. What is the return on the price-weighted index over the year?

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

Problem 1PS

See similar textbooks

Related questions

Q: Your stock's returns for the past four years are as follows. t Return t1 19.79% t2 -0.58% t3…

A: The geometric average return is the average of the product of multiple numbers. The terms "compound…

Q: the ata in the following 曲 a. Average return and volatility for each stock. b. Covariance between…

A: In simple words average return depicts the arithmetic average return of historical returns. where as…

Q: A stock has had returns of -5.32 percent, -7.58 percent, 4.68 percent, 7.7 percent, 8.98 percent,…

A: The below expression can be used to calculate geometric average return:

Q: You have the following price for a stock for several recent years. Assume that the stock F year…

A: Here, F year Begining of year price # of shares bought or sold 2005…

Q: Consider the three stocks in the following table. Pt represents price at time t splits two-for-one…

A: Price weighted index:A price-weighted index is a type of stock market index where the individual…

Q: Currently, the Dow Jones Industrial Average is computed by. adding the prices of 30 large…

A: A stock index is a composition of different stocks that measures the overall performance of its…

Q: You are given the following information regarding prices for a sample of stocks. Stock B: Stock A B…

A: Here,

Q: Using the data in the following table,, estimate the: a. Average return and volatility for each…

A: The standard deviation is a statistical indicator of market volatility, which gauges how far prices…

Q: a. A B C Po 90 50 100 Qo 100 200 200 P₁ 95 45 110 Q₁ 100 200 200 P₂ 95 45 55 Q₂ 100 200 400…

A: The rate of return refers to the minimum return to be earned by the investor while investing in the…

Q: Suppose a stock has generated the following annual returns: 13.6%, -12.1% and 7.6%. What was its…

A: Annual returns are as follows13.6%-12.1%7.6%

Q: Using the data in the following table, a. Average return and volatility for each stock. b.…

A: YearsStock AStock B2010-13%20%201120%12%20128%9%2013-1%-9%20144%-9%201511%27%Required:Average return…

Q: Using the data in the following table, estimate the average return and volatility for each stock.…

A: Step 1: Calculate the average return for each stock. For the average return, we must add all of the…

Q: Suppose a stock has generated the following annual returns: 11.4%, -7.9% and 5.4%. What was its…

A: Here,Annual Return are as follows:11.4%-7.9%5.4%

Q: Arithmetic average return Geometric average return % olo olo %

A: Return 1 = r1 = 39.50%/100 = 0.3950 in decimalReturn 2 = r2 = 23.50%/100 = 0.2350 in decimalReturn 3…

Q: a. Calculate the arithmetic average return for the period 2018 to 2021 to Percentage Return).

A: The average return is the basic mathematical average of a series of returns over a certain time…

Q: Directions: Compute the total returns, the average of returns, and the standard deviation of the…

A: Data given: ERGH Inc., Year Stock Price (P) Jan-21 0.088 Feb-21 0.090 Mar-21 0.097…

Q: A stock has the following returns over a 3 year period: 25%, -4%, 8%. What is this stock's geometric…

A: Geometric Average Return is the actual annual return of an investment earned during a certain period…

Q: An analyst gathered the following information for a stock and market parameters: stock beta = 1.42;…

A: The Capital Asset Pricing Model (CAPM), which takes into account ongoing testing and research, is a…

Q: How do you calcuate the bechmark and historical return for the stock ARKK when the last price listed…

A: Examining historical return can give an understanding into how a security or market has responded to…

Q: A stock has had the following year-end prices and dividends: Year Price Dividend $16.25 1 18.43 $…

A: Geometric return is annualized return found by taking individual return. This return is calculated…

Q: stock has had returns of -7.77 percent, -4.59 percent, 5.87 percent, 9.98 percent, 8.7 percent, and…

A: The below expression can be used to calculate geometric average return:

Q: A stock had the following year-end prices and dividends. What is the geometric average annual return…

A: Geometric mean is a measure of central tendency which means it reflects the value that defines and…

Q: What are the arithmetic and geometric returns for the stock?

A: Arithmetic and Geometric mean are used to calculate the expected mean of the stock Arithmetic Mean…

Q: given a stock with a current price of 85.50, exercise price of 83.75, put price of 2.60, call price…

A: The put-call parity refers to the relationship between the prices of the call and the put options on…

Q: An analyst gathered the following information for a stock and market parameters: stock beta= 1.08; •…

A: The possible remuneration that will be provided to the stockholders for the upcoming year in the…

Q: Consider the three stocks in the following table. Pt represents price at time t, and Qt represents…

A: Rate of return is a financial measure of an investment's gain or loss as a percentage of the…

Q: A stock has had returns of -19.1 percent, 29.1 percent, 25.2 percent, -10.2 percent, 34.9 percent,…

A: r1 = - 0.191 r2 = 0.291 r3 = 0.252 r4 = - 0.102 r5 = 0.349 r6 = 0.271 Number of returns (n) = 6

Q: Consider the three stocks in the following table. Pt represents price at time splits two-for-one in…

A: Rate of return refers to the return earned on the investment made during the life of the project…

Q: An analyst gathered the following information for a stock and market parameters: stock beta = 1.23;…

A: The Capital Asset Pricing Model (CAPM), which takes into account ongoing testing and research, is a…

Q: epresents shares outstanding at time t. Stock C splits two-for-one in the last period ( P₁ Q1 P2 QO…

A: rate of return refers to the return earned over the investment amount by the investors which is…

Q: What is the volatility of a certain stock index from 2019 to 2022? The return for each year is given…

A: Here, YearReturn14.30%210.75%32.05%412.70%

Q: a. Calculate the returns on both the price-weighted index and the market value- weighted index of…

A: A market-value weighted index is a kind of stock market index where the weights of the individual…

Question

A price-weighted index comprises of 3 stocks A, B, and C. The beginning of year prices of 3
stocks are $25, $30, and $65, respectively. The end of year prices of 3 stocks are $20, $23, and
$86, respectively. What is the return on the price-weighted index over the year?
Select one:

Consider the following data concerning the expected return and standard deviation of a stock A
and a stock B with a correlation of 0.5.
Expected
Return Standard
Deviation
Stock A
16%
20%
Stock B
10%
15%
A new portfolio is formed with 25% invested in A and 75% invested in B. Determine the expected
return of the new portfolio.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Note

VIEW

Step 2 Introduction of price weighted index

VIEW

Step 3 Total value of all stocks at starting of the year

VIEW

Step 4 Calculation of Beginning Index value

VIEW

Step 5 Calculation of Total value of all stocks at the end of the year

VIEW

Step 6 Calculation of Ending Index value

VIEW

Step 7 Calculation of Numerical loss or gain on investment

VIEW

Step 8 Calculation of Rate of return of the index

VIEW

Step 9 Final answer

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 9 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

A stock has had returns of 39.00 percent, 23.00 percent, 34.00 percent, -11.00 percent, 21.00 percent, and -53.00 percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Arithmetic average return Geometric average return
Calculate the Holding Period Return (HPR) for the portfolio of the three stocks mentioned in Table 1. Calculate the Holding Period Return (HPR) for each of the stock A, B, and C individually given in Table 1. C. Based upon your calculations, evaluate the Holding Period Return (HPR) to exhibit what change in wealth has taken place?
How do i start this question? Ford stock produced the following monthly returns (January - May): 1%, 10%, 6%, 3%, and 2%. I) Calculate the average return for each stock. II) Calculate the standard deviation of monthly return for each stock.
A stock has had returns of 11 percent, 15 percent, 19 percent, and -48 percent over the last four years. What is the geometric average return over this period?
You are given the following information regarding four stocks in a portfolio: Company # of Shares Price ($) 2020 Price ($) 2021 ELITE 40,000 3.11 2.99 FTNA 5,000 30.37 34.10 GWEST 55,000 2.05 1.80 TTECH 20,000 5.55 4.60 Assuming 2020 is the base year with an index value of 500: i. Compute a price-weighted index of these four stocks for 2021. ii. Compute a value-weighted index of these four stocks for 2021. What is the percentage change in the value of the index from 2020 to 2021? iii. Compute the un-weighted index of these four stocks for 2019. What is the percentage change in the value of the index from 2020 to 2021
The following are the end-of-month prices for both the Standard & Poor's 500 Index and Nike's common stock. a. Using the data in the popup window, calculate the holding-period returns for each of the months. b. Calculate the average monthly return and the standard deviation for both the S&P 500 and Nike. c. Develop a graph that shows the relationship between the Nike stock returns and the S&P 500 Index. (Show the Nike returns on the vertical axis and the S&P 500 Index returns on the horizontal axis.) d. From your graph, describe the nature of the relationship between Nike stock returns and the returns for the S&P 500 Index.
A stock has had returns of 16 percent, 13 percent, 6 percent, -14 percent, -6 percent, and 18 percent over the last six years. What are the arithmetic and geometric returns for the stock?
A stock had returns of 15 percent, 20 percent, 11 percent, 5 percent, 11 percent, and -7 percent over the last six years. What is the arithmetic return for the stock? Arithmetic return What is the geometric return for the stock? Geometric return
Suppose a market consists of four stocks. The number of shares outstanding for each stock as well as the stock prices in two consecutive days are as follows: Stock A Stock B Stock C Stock D Shares outstanding 200 1000 400 3000 I $5 $30 $100 $40 Ро $15 $25 $80 $50 a) Compute the percentage increase in the price-weighted index for this market. b) Compute the percentage increase in the value-weighted index for this market. P₁
Consider the three stocks in the following table. P(t) represents price at time t, and Q(t) represents shares outstanding at time t. Stock C splits two-for-one in the last period. What is the rate of return for the price-weighted index that is formed using Stocks A, B, and C from time period 1 to time period 2? B C zero P(1) 95 45 100 -20.83% 20.83% None of the above Q(1) 100 200 200 P(2) 95 45 50 Q(2) 100 200 400
If lastdividend = $4.8, g = 4.9%, and P0 = $77.8, what is the stockâ€™s expected totalreturn for the coming year?Note: Enter your answer rounded off to two decimal points.Do not enter % in the answer box. For example, if your answer is 0.12345 thenenter as 12.35 in the answer box.
Suppose that the average stock has a volatility of 58%, and that the correlation between pairs of stocks is 18%. Estimate the volatility of an equally weighted portfolio with: a. 1 stock b. 30 stocks c. 1,000 stocks

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS