1 answer

55) 55) A benchmark index has three stocks priced at $23, S43 and $56 yesterday. The...

Question:

55) 55) A benchmark index has three stocks priced at $23, S43 and $56 yesterday. The number of outstanding shares for each is
55) 55) A benchmark index has three stocks priced at $23, S43 and $56 yesterday. The number of outstanding shares for each is 350,000 shares, 405,000 shares and 553,000 shares, respectively. If the market value weighted index was 970 yesterday and the prices changed to $23, S41 and $58 today, what is the new index value? A) 985 B) 970 0975 D) 960

Answers

Yesterday's details

Market value of 350000 shares at $23 = 23*350000 = $8050000

Market value of 405000 shares at $43 = 43*405000 = $17415000

Market Value of 553000 shares at $56 = 56*553000 = $30968000

Total market value of index = 805000+17415000+30968000 = $56433000

Market value weighted index yesterday = $970

so divisor = 56433000/907 = 58178.35

today' details

Market value of 350000 shares at $23 = 23*350000 = $8050000

Market value of 405000 shares at $41 = 41*405000 = $16605000

Market Value of 553000 shares at $58 = 58*553000 = $32074000

Total market value of index = 805000+16605000+32074000 = $56729000

So, market value weighted index today = 56729000/58178.35 = 975

So new value of index = 975

.

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