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Jan. 13, 2020                                  20          40              30                                   1000      2000              1000* Jan. 14, 2020                                  25          42              18                                   1000      2000              2000 Jan. 15, 2020                                  27          45              8                                   1000**    2000              2000 Jan. 16, 2020                                  20          40              10                                   3000      2000              2000   *2:1 Split on Stock Z after Close on Jan. 13 **3:1 Split on Stock X after Close on Jan. 15               The base date for index calculations is January 13 Calculate a price weighted index for January 13th. What is the divisor for the price-weighted index at the beginning of January 14th? Calculate the price weighted index for January 14th. Calculate a value weighted index for January 14, if the initial index value is 100 on January 13.

Jan. 13, 2020                                  20          40              30                                   1000      2000              1000* Jan. 14, 2020                                  25          42              18                                   1000      2000              2000 Jan. 15, 2020                                  27          45              8                                   1000**    2000              2000 Jan. 16, 2020                                  20          40              10                                   3000      2000              2000   *2:1 Split on Stock Z after Close on Jan. 13 **3:1 Split on Stock X after Close on Jan. 15               The base date for index calculations is January 13 Calculate a price weighted index for January 13th. What is the divisor for the price-weighted index at the beginning of January 14th? Calculate the price weighted index for January 14th. Calculate a value weighted index for January 14, if the initial index value is 100 on January 13.

Essentials Of Investments
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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Jan. 13, 2020                                  20          40              30                                   1000      2000              1000*

Jan. 14, 2020                                  25          42              18                                   1000      2000              2000

Jan. 15, 2020                                  27          45              8                                   1000**    2000              2000

Jan. 16, 2020                                  20          40              10                                   3000      2000              2000

 

*2:1 Split on Stock Z after Close on Jan. 13

**3:1 Split on Stock X after Close on Jan. 15

              The base date for index calculations is January 13

Calculate a price weighted index for January 13th.

What is the divisor for the price-weighted index at the beginning of January 14th?

Calculate the price weighted index for January 14th.

Calculate a value weighted index for January 14, if the initial index value is 100 on January 13.

Expert Solution
Step 1

Given:

Given            
Date Stock Price Number of shares 
  X Y Z X Y Z
Jan.13,2020                                  20          40              30                                   1000      2000              1000
Jan.14,2020                                  25          42              18                                   1000      2000              2000
Jan.15,2020                                  27          45              8                                   1000 2000              2000
Jan.16,2020                                  20          40              10                                   3000      2000              2000
             
2:1 Stock Split in Stock Z after close on Jan 13
3:1 Stock Split in Stock X after close on Jan 15
The base Date for index calculations is Jan 13        

Required:

  1. Price-Weighted index for Jan 13th
  2. The divisor for Jan 14th
  3. Price-weighted index for Jan 14th
  4. The Value weighed index for Jan 14th if the index on Jan 13th is 100.
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