Given the following information on five stocks, construct: a. A simple price-weighted average b. A value-weightedaverage c. A geometric average d. What is the percentage increase in each average if the stock prices change to those inColumn I? e. What is the percentage increase in each average if the stock prices change from those in the Price column tothose in Column II? f. Why were the percentage changes different in parts (d) and (e)? g. If you were managing a fund andwanted a source to compare your results to, which of the three averages would you prefer to use, and why?Stock Price# of Shares IIIABCDEF$12.00 150,000$14.00125,000$11.00 200,000$ 22.00 80,000$8.0030,000$29.00 140,000$12.00$12.00$14.00 $14.00$20.00 $11.00$ 22,00 $ 22.00$8.00$15.00$29.00 $29.00

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Given the following information on five stocks, construct: a. A simple price-weighted average b. A value-weighted average c. A geometric average d. What is the percentage increase in each average if the stock prices change to those in

Given the following information on five stocks, construct: a. A simple price-weighted average b. A value-weighted average c. A geometric average d. What is the percentage increase in each average if the stock prices change to those in

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

Given the following information on five stocks, construct: a. A simple price-weighted average b. A value-weighted
average c. A geometric average d. What is the percentage increase in each average if the stock prices change to those in
Column I? e. What is the percentage increase in each average if the stock prices change from those in the Price column to
those in Column II? f. Why were the percentage changes different in parts (d) and (e)? g. If you were managing a fund and
wanted a source to compare your results to, which of the three averages would you prefer to use, and why?
Stock Price
# of Shares I
II
A
B
C
D
E
F
$12.00 150,000
$14.00
125,000
$11.00 200,000
$ 22.00 80,000
$8.00
30,000
$29.00 140,000
$12.00
$12.00
$14.00 $14.00
$20.00 $11.00
$ 22,00 $ 22.00
$8.00
$15.00
$29.00 $29.00

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