The following questions rely on the numbers for the share prices given below. AirLines t=0 Closing Price PO (USD) t=1 Closing Price P1 (USD) Shares outstanding Q (million) American AirLines (AAL) 90 95 100 50 100 45 200 110 200 Delta Air Lines (DAL) Southwest Airlines (SAL) The share prices of American Airlines Group Inc. (AAL), Delta Air Lines Inc. (DAL), and Southwest Airlines Co. (SAL) for March 28, 2022 are listed here under "Prev. Price" and for April 28, 2022 under "Price". The shares outstanding on March 28, 2022 for each company are listed under "Shares". Prices observations listed are at the close and any adjustments also are assumed to occur at the close of the relevant day. An Airlines index is established starting on March 28, 2021. The information from the above companies is used to create an "AIR3" index. Answer the following questions for each of three possible indexes: AIR3VW, AIR3PW, and AIR3EW (value-weighted, price-weighted, and equal-weighted). Choose a divisor to set the initial index value equal to 100 in each of the three index cases. (a) Calculate the index values for each of the three cases (value-weighted, price-weighted, and equal-weighted) at the close on March 28. Obtain the divisor on March 28, 2021 for each of the three cases. Value Weighted Index (AIR3VW) $ (b) What are the monthly returns based on each of the possible indexes? You establish an ETF with $20,000 initial investment at the close on March 28 that promises to track exactly the AIR3 index (c) What is the composition of your ETF's portfolio in terms of the number of shares held of each asset for each of the three possible AIR3 index choices? (d) What is the final US dollar market value of the ETF (at the close on April 28) for each of the three index types?
The following questions rely on the numbers for the share prices given below. AirLines t=0 Closing Price PO (USD) t=1 Closing Price P1 (USD) Shares outstanding Q (million) American AirLines (AAL) 90 95 100 50 100 45 200 110 200 Delta Air Lines (DAL) Southwest Airlines (SAL) The share prices of American Airlines Group Inc. (AAL), Delta Air Lines Inc. (DAL), and Southwest Airlines Co. (SAL) for March 28, 2022 are listed here under "Prev. Price" and for April 28, 2022 under "Price". The shares outstanding on March 28, 2022 for each company are listed under "Shares". Prices observations listed are at the close and any adjustments also are assumed to occur at the close of the relevant day. An Airlines index is established starting on March 28, 2021. The information from the above companies is used to create an "AIR3" index. Answer the following questions for each of three possible indexes: AIR3VW, AIR3PW, and AIR3EW (value-weighted, price-weighted, and equal-weighted). Choose a divisor to set the initial index value equal to 100 in each of the three index cases. (a) Calculate the index values for each of the three cases (value-weighted, price-weighted, and equal-weighted) at the close on March 28. Obtain the divisor on March 28, 2021 for each of the three cases. Value Weighted Index (AIR3VW) $ (b) What are the monthly returns based on each of the possible indexes? You establish an ETF with $20,000 initial investment at the close on March 28 that promises to track exactly the AIR3 index (c) What is the composition of your ETF's portfolio in terms of the number of shares held of each asset for each of the three possible AIR3 index choices? (d) What is the final US dollar market value of the ETF (at the close on April 28) for each of the three index types?
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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Transcribed Image Text:The following questions rely on the numbers for the share prices given below.
AirLines
t=0
Closing Price
PO (USD)
t=1
Closing Price
P1 (USD)
Shares outstanding
Q (million)
American AirLines (AAL)
90
95
100
50
100
45
200
110
200
Delta Air Lines (DAL)
Southwest Airlines (SAL)
The share prices of American Airlines Group Inc. (AAL), Delta Air Lines Inc. (DAL), and
Southwest Airlines Co. (SAL) for March 28, 2022 are listed here under "Prev. Price" and for
April 28, 2022 under "Price". The shares outstanding on March 28, 2022 for each company are
listed under "Shares". Prices observations listed are at the close and any adjustments also are
assumed to occur at the close of the relevant day.
An Airlines index is established starting on March 28, 2021. The information from the above
companies is used to create an "AIR3" index.
Answer the following questions for each of three possible indexes: AIR3VW, AIR3PW, and
AIR3EW (value-weighted, price-weighted, and equal-weighted). Choose a divisor to set the
initial index value equal to 100 in each of the three index cases.
(a) Calculate the index values for each of the three cases (value-weighted, price-weighted,
and equal-weighted) at the close on March 28. Obtain the divisor on March 28, 2021 for
each of the three cases.
Value Weighted Index (AIR3VW)
$
(b) What are the monthly returns based on each of the possible indexes?
You establish an ETF with $20,000 initial investment at the close on March 28 that promises to
track exactly the AIR3 index
(c) What is the composition of your ETF's portfolio in terms of the number of shares held of
each asset for each of the three possible AIR3 index choices?
(d) What is the final US dollar market value of the ETF (at the close on April 28) for each of
the three index types?
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