Hw.163. Questions EOC Problems 3-2OOOO1.2.3.4.5.6.7.8.9.10.ο ο ο ο ο οOEEeBookProblem 3-2 Price-Weighted IndexConsider a price-weighted index like the DJIA with only 3 stocks: Stock A, Stock B, and Stock C. The original and new prices of these stocks, along with the divisor,are shown in the following table.Old Price New PriceStock AStock B(c)Stock CDivisor$26$52$750.1$30$54(a) What is the index level at the old prices?The index level at the old prices is$82(b) If the stock prices change to the new prices, as noted in the table, what would the new index level be?The new index level at the new prices would be%Given the change between the old and new prices, what is the index return? Round your answer to 2 decimal places.The index return isQuestion 2 of 10 ►(d)If Stock C conducted a 2 for 1 stock split, what should the new divisor be? Round your answer to 4 decimal places.The new divisor would beCheck My Work

The price-weighted index is the index of a group of stocks where the stocks are provided weights…

eBook Problem 3-2 Price-Weighted Index Consider a price-weighted index like the DJIA with only 3 stocks: Stock A, Stock B, and Stock C. The original and new prices of these stocks, along with the divisor, are shown in the following table. Old Price New Price Stock A Stock B Stock C Divisor $26 $52 $75 0.1 $30 $54 $82 (a) What is the index level at the old prices? The index level at the old prices is (b) If the stock prices change to the new prices, as noted in the table, what would the new index level be? The new index level at the new prices would be (c) Given the change between the old and new prices, what is the index return? Round your answer to 2 decimal places. The index return is % heck My WOPR (d) If Stock C conducted a 2 for 1 stock split, what should the new divisor be? Round your answer to 4 decimal places. The new divisor would be

eBook Problem 3-2 Price-Weighted Index Consider a price-weighted index like the DJIA with only 3 stocks: Stock A, Stock B, and Stock C. The original and new prices of these stocks, along with the divisor, are shown in the following table. Old Price New Price Stock A Stock B Stock C Divisor $26 $52 $75 0.1 $30 $54 $82 (a) What is the index level at the old prices? The index level at the old prices is (b) If the stock prices change to the new prices, as noted in the table, what would the new index level be? The new index level at the new prices would be (c) Given the change between the old and new prices, what is the index return? Round your answer to 2 decimal places. The index return is % heck My WOPR (d) If Stock C conducted a 2 for 1 stock split, what should the new divisor be? Round your answer to 4 decimal places. The new divisor would be

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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Question 1 Consider the three stocks in the following table. P, represents price at time t, and Qt represents shares outstanding at time t. Po Qo P₁ Q₁ 50 100 60 100 A IB 30 200 24 200 C 20 200 30 200 a. Calculate the rate of return on a price-weighted index of the three stocks b. Calculate the rate of return on a market value-weighted index of the three stocks
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a. Construct a price-weighted index for these three stocks, and compute the percentagechange in the index for the period from T to T + 1. b. Construct a value-weighted index for these three stocks, and compute the percentagechange in the index for the period from T to T + 1. c. Briefly discuss the difference in the results for the two indexes.
Answer in typing other wise I will downvote you
Problem 2-12 (Algo) 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 Po A B P1 01 P2 02 00 140 145 145 145 145 145 135 290 130 290 130 290 270 290 280 290 145 580 C Required: Calculate the first-period rates of return on the following indexes of the three stocks (t = 0 to t = 1): Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. A market-value-weighted index. b. An equally weighted index. a. Rate of return b. Rate of return % %
Astromet is financed entirely by common stock and has a beta of 1.20. The firm pays no taxes. The stock has a price-earnings multiple of 11.0 and is priced to offer a 10.9% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 4.6%. Calculate the following: Required: a. The beta of the common stock after the refinancing b. The required return and risk premium on the common stock before the refinancing c. The required return and risk premium on the common stock after the refinancing d. The required return on the debt e. The required return on the company (i.e, stock and debt combined) after the refinancing If EBIT remains constant: f. What is the percentage increase in earnings per share after the refinancing? g-1. What is the new price-earnings multiple? g-2. Has anything happened to the stock price? Complete this question by entering your answers in the tabs below. Reg A to E Reg F to G2…
1. Consider the three stocks in the following table. P, represents price at time t, and Q, represents shares outstanding at time t. Calculate the rates of return on the following indexes of the three stocks: A B с Po 90 50 100 a. A market-value-weighted index. b. An equally weighted index. Qo 100 200 200 P₁ 95 45 110 Q₁ 100 200 200
solve the 2nd parts correctly
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 new divisor for the price-weighted index that is formed using Stocks A, B, and C if the starting divisor is 3? B 2.475 2.340 2.455 2.375 P(1) 95 45 100 Q(1) 100 200 200 P(2) 95 45 50 Q(2) 100 200 400
The index model has been estimated for stocks A and B with the following results: = 0.12 +0.670RM+еA RA= RB=0.04 +1.512RM + еB °M= 0.330 σ(eд) = 0.20 σ(eB) = 0.10 What is the covariance between each stock and the market index? (Round your answers to 4 decimal places.) Stock A covariance Stock B covariance
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
2. The following table shows the constituent stocks of a hypothetical index. Stock B splits two-for-one during the period. Stock A B C Beginning of Period Price ($) Shares 30 75 36 2,000 500 1,200 End of Period Price ($) 26 40 32 Shares 2,000 1,000 1,200 a. Calculate the returns on both the price-weighted index and the market value- weighted index of three stocks over the period. b. If you just buy 5,000 shares of stock C for $36, hold for 1 year, collect $8 dividend and sell it at $32. Calculate your total return.

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