Three stocks have share prices of $12, $75, and $30 with total market values of $400 million, $350 million and $150 million resp

Question

3 years ago

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Three stocks have share prices of $12, $75, and $30 with total market values of $400 million, $350 million and $150 million resp

ectively. If you were to construct a price-weighted index of the three stocks what would be the index value?A. 300B. 39C. 43D. 30

Mathematics

1 answer:

IrinaVladis [17] · Answer 1 · 2022-07-13T09:42:27+03:00

Answer:

B. 39

Step-by-step explanation:

The total market share values of the stocks does not influence on the price-weighted index, as the index is simply obtained by the sum of all share prices divided by the number of different stocks. The price-weighted index of the three stocks is:

$I=\frac{\$12+\$75+\$30}{3}\\I=\$39$

The answer is alternative B. 39.