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Consider the following three stocks:     Stock Price Number of shares outstanding         Stock A $ 40     200   Stock B $ 70     500   Stock C $ 10     600                  Assume at these prices that the value-weighted index constructed with the three stocks is 490. What would the index be if stock B is split 2 for 1 and stock C 4 for 1?                   A)   265              B)   430          C)   355          D)   490          E)   1000

Consider the following three stocks:     Stock Price Number of shares outstanding         Stock A $ 40     200   Stock B $ 70     500   Stock C $ 10     600                  Assume at these prices that the value-weighted index constructed with the three stocks is 490. What would the index be if stock B is split 2 for 1 and stock C 4 for 1?                   A)   265              B)   430          C)   355          D)   490          E)   1000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Consider the following three stocks:
 

 

Stock

Price

Number of shares outstanding

        

Stock A

$

40

 

 

200

 

Stock B

$

70

 

 

500

 

Stock C

$

10

 

 

600

 

 

            


 Assume at these prices that the value-weighted index constructed with the three stocks is 490. What would the index be if stock B is split 2 for 1 and stock C 4 for 1?


        
         A)   265    
         B)   430
         C)   355
         D)   490
         E)   1000
Please Provide Justification 

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