1 Compile a price weigheed average for May 10, 2018silorte the Dow Joncs Industr

Question

1 Compile a price weigheed average for May 10, 2018silorte the Dow Joncs Industrial Average sing the abeve four spanies (u a drvisor of 2.7) For vese we will call he avenge te DIna Tabk 2: Stork prices on Jaly 11, 201 34 50,000 Total Maket Value as of What is he DILA on Jaly 11 (egain divisor is 2.7) b.Wh--the % change in the DIIA from May 10 to July 117 c what .. the %change total market value ofthe far com ies? Using the infomation in Table 1, e thst copay A splies 2 fo lf there in.twtment made 4 dnot, whati, d. DRA saer the splir? b Suggest ae 186777 ollowing table shows the market va dts s of the bas perid for avae weigheed index Using the price given in Tble tfor May 1o period starting indes of 100 by s Te) What is the level of the valoe weightod ndes on July I1 when the price of company A

Explanation / Answer

4.

So, Weight of each shares,

A = 5.92% (360,000/6,080,000)

B = 72.37% (4,400,000/6,080,000)

C = 4.44% (270,000/6,080,000)

D = 17.27% (1,050,000/6,080,000)

Value Weighted Index = (MV * Weight)/MV

= (360000*5.92% + 4400000*72.37% + 270000 * 4.44% + 1050000*17.27%)/6080000

= 55.90%

5.

Value Weighted Index = (MV * Weight)/MV

= 24,729,195/49,080,000

= 50.39%

6.

a. Change from May 10 to July 11,

-5.51% (50.39 - 55.90)

b. Change in total market value

Company Price(A) Shares(B) Market Value (A*B) A 40 9000 360,000 B 55 80000 4,400,000 C 18 15000 270,000 D 7 150000 1,050,000 TOTAL 6,080,000

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