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This test has a time limit of 2 hours and 5 minutes This test will save and subemit automatically when the time expires Warnings appear when half the time, 5 minutes, 1 minute, and 30 seconds remain tempts Not allowed. This test can only be taken once npletion Once started,this test mustbe complated in one siting Do not kave the testbefore clkcking Save and Submit ning Time: 1 hour, 58 minutes, 59 seconds. tion Completion Status: oving to another question will save this response 15 Using the table below, for the price-weighted index, if stock A is split 2 to 1; stock B is split 3 to 1; and stock C is split 2 to 1; what is the index? Stock Beta Share 100,000$ 20 150.000 100.00035 Price Return 10%- 12% 14% $ 30 1.05 1.15 Mong to another question wil sanoins nesponse splay E221i

Explanation / Answer

Ans. According to the question we will first calculate the current value of the index using price weighted before the split will happen for each scurity. To calculate the price weighted value, we will add all the prices and divide it with the number of stocks. In this case

The total number of stocks are 3, and total price is $85. We will divide the price with number os stocks 85/3= $28.333.

Now, as the split will happen, the number will change we would have to divide the new adjusted total price of the shares with the previous day's non split total share price to get the dividing factor.

So, the chnges to the prices due to split for each stock will be as follows:Stock

So now, to get a new dividing factor we will divide the new split adjusted total price with previous day's non split total price 37.5/28.33=1.3236.

Now til the next split we will use 1.3236 as the dividing factor.

Stock Shares Price ($) A 100,000 20 B 100,000 30 C 100,000 35

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