Assume the following information concerning two stocks that make up an index. Wh

Question

Assume the following information concerning two stocks that make up an index. What is the value-weighted return for the index? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Assume the following information concerning two stocks that make up an index. What is the value-weighted return for the index? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Value weighted return = [Market value at end of year / Market value at begining of year - 1] * 100%

= [($49 * 41,000 + $79 * 29,000) / ($44 * 41,000 + $74 * 29,000) - 1] * 100%

= [$4,300,000 / $3,950,000 - 1] * 100%

= 8.86%

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