Question

A benchmark index has three stocks priced at $23, $43, and $56. 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, $41, and $58 today, what is the new index value?

Answer 1

Answer:

Explanation:

Old prices are $23, 43, 56

New prices $23, 41, 58

Shares 350,000; 405,000; 553,000

Multiply Old prices by Shares:

23*350,000 = 8,050,000

43*405,000= 17,415,000

46*553,000= 30,968,000

In total = 56,433,000

Multiply New prices by Shares:

23*350,000 = 8,050,000

41*405,000 = 16,605,000

58*553,000 = 32,074,000

In total = 56,729,000

New index value = 970*56,729,000/56,433,000 = 975