Currently, the Dow Jones Industrial Average is computed by O adding the prices of 30 large "blue-chip" stocks and dividing by 30 O calculating the total market value of the 30 firms in the index and dividing by 30 O measuring the current total market value of the 30 stocks in the index relative to the total value on the previous day O adding the prices of 30 large "blue-chip" stocks and dividing by a divisor adjusted for stock splits and large stock dividends

Currently, the Dow Jones Industrial Average is computed by O adding the prices of 30 large "blue-chip" stocks and dividing by 30 O calculating the total market value of the 30 firms in the index and dividing by 30 O measuring the current total market value of the 30 stocks in the index relative to the total value on the previous day O adding the prices of 30 large "blue-chip" stocks and dividing by a divisor adjusted for stock splits and large stock dividends

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

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How can I calculate geometric average in Excel?
You construct a price-weighted index of 49 stocks. At the beginning of the day, the index is 6,725.88. During the day, 48 stock prices remain the same, and 1 stock price increases $5.70. At the end of the day, your index value is 6,749.19. What is the divisor on your index? Note: Do not round intermediate calculations. Round your answer to 8 decimal places. what is the Divisor?
Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. A B C Po 82 42 84 Rate of return 00 100 Divisor 200 200 P1 87 37 94 01 100 200 200 % P2 87 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t= 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 370 47 92 100 200 400 b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the rate of return of the price-weighted index for the second period (t=1 to t=2).
A stock has had returns of -19.1 percent, 29.1 percent, 25.2 percent, -10.2 percent, 34.9 percent, and 27.1 percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Arithmetic average return Geometric average return % %
Vinay
Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. ABC Po 86 46 92 le 100 200 200 Rate of return P1 91 41 102 Q1 100 1.89 % 200 200 P2 91 41 51 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 22 100 200 400
A stock has had the following year-end prices and dividends: Year 1234 in 10 5 6 Price $64.68 71.55 77.35 63.62 73.81 83.25 Dividend Arithmetic average return. Geometric average return $.67 .72 .78 .87 .94 What are the arithmetic and geometric returns for the stock? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.. 32.16. % %
An index consists of the following securities and has an index divisor of 3.0. What is the price-weighted index return? Index Stock Shares Outstanding 1,000 Beginning Share Price $26 Ending Share Price 4,000 $32 $28 $30 3,000 $19 $ 22 DEF 9.33% 10.35% 11.54% 12.33% 13.00%
Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period (t=2). Po A 100 B 60 C 120 Qo 100 200 200 P₁ 105 55 130 Rate of return b. An equally weighted index. Rate of return Q₁ 100 200 200 % P2 % 105 55 65 Calculate the first-period rates of return on the following indexes of the three stocks (t = O to t = 1): (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. A market value-weighted index. Q2 100 200 400
Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period. Stock A B C Po 90 45 80 90 425 450 650 a. Rate of return b. New divisor c. Rate of return P1 95 40 90 91 425 450 650 % P2 Required: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t= 1). Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. Calculate the new divisor for the price-weighted index in year 2. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. Calculate the rate of return for the second period (t=1 to t = 2). Note: Round your answer to 2 decimal places. % 92 425 450 95 40 45 1,300
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 3.6% + 1.2RM + eA RB = -1.6% + 1.5RM + eB OM = 16%; R-squarea = 0.25; R-square; = 0.15 What is the covariance between each stock and the market index? (Calculate using numbers in decimal form, not percentages. Do not round your intermediate calculations. Round your answers to 3 decimal places.) Covariance Stock A Stock B
Stocks A and B have the following historical returns:YearStock A's Returns, raStock B's Returns, ra2016(18.60%)(14.50%)201734.2520.40201814.7539.902019(1.00)(9.70)202026.7520.05a. Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places.Stock A:11.23%Stock B:11.23%b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the portfolio have been each year? Round your answers to two decimal places. Negative values should be indicated by a minus sign.YearPortfolio2016-16.55%201727.33201827.33%2019-5.35202023.40What would the average return on the portfolio have been during this period? Round your answer to two decimal places.11.23c. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places.Stock AStock BPortfolioStandard Deviationd. Calculate the coefficient of variation for each…

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