Answer:
1.The stock prices for the five stocks before the split is $40
2. The new divisor for a price weighted index is $ 4.5 after the split
Step by Step Explanation:
1.
Price weighted index =10+20+80+50+40/5
Price weighted index =40
Therefore, the price-weighted index before the split is 40.
2.After the split, the last stock became half to the original value. The value of last stock before the split is $40 and after the split is $20.
To find the new price divisor, let assume the denominator is X.
40=10+20+80+50+20/X
Therefore X=10+20+80+50+20/40
X = $4.5
Therefore, the new price divisor for the price-weighted index after the split is $4.5