Assume the Dow Jones Industrial Average index consisted of two stocks, POS and CLO prior to the end of trading hours yesterday. At the trading close, the ticker CLO is replaced by LOG with stock price $55. Assume the firm (old ticker: CLO, new ticker:LOG) has no change in their fundamental value. Prices are shown in the table below. What is the new divisor ??? Round your answer to three decimal places Please give a detailed explanation using formulas, not excel. A. 1.048 B. 1.078 C. 1.359 D. 0.736 E. 0.927 F. 2.000
Assume the Dow Jones Industrial Average index consisted of two stocks, POS and
CLO prior to the end of trading hours yesterday. At the trading close, the ticker CLO is
replaced by LOG with stock price $55. Assume the firm (old ticker: CLO, new ticker:LOG)
has no change in their fundamental value. Prices are shown in the table below. What is the
new divisor ??? Round your answer to three decimal places
Please give a detailed explanation using formulas, not excel.
B. 1.078
C. 1.359
D. 0.736
E. 0.927
F. 2.000
The Dow Jones Industrial Average (DJIA) index divisor is a mathematical constant used to calculate the index's value. It accounts for stock splits, dividends, and other corporate actions that could affect the index's level. Changes in the divisor ensure that historical continuity is maintained when there are changes in the components of the DJIA.
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