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shepuryov [24]
3 years ago
8

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $93, $351, and $74, respectively. If Baker u

ndergoes a 2-for-1 stock split, what is the new divisor for the price-weighted index?
Business
2 answers:
denis-greek [22]3 years ago
7 0

Answer:

1.98359

Explanation:

Given that :

Index have three stocks and the prices of those sticks are $93, $351, and $74, respectively. Usually what stock split does is to increase he number of share outstanding without any interference with the original total amount of money.

So if Baker ( the company B ) undergoes 2:1 split stock, it typically implies that one share will be divided by two shares.

New divisor for price - weighted index is given by the formula:

Price weighted index = \frac{Price_{A} + Price _{B afterstockspit} +Price_{C}}{\frac{Price_{A} + Price _{B beforestockspit} +Price_{C}} {Number of Stocks     } }

Price of stock B before stock split is = $351

To determine the new stock B after stock split; we have

Price weighted index₀ = \frac{Price _{B before stock split}}{Stocl split ratio}

= \frac{351}{2}

= $175.5

The new divisor for the price weighted index is as follows;

Price weighted index = \frac{Price_{A} + Price _{B afterstockspit} +Price_{C}}{\frac{Price_{A} + Price _{B beforestockspit} +Price_{C}} {Number of Stocks     } }

Price weighted index = \frac{93+175.5+74}{   \frac{93+351+74}{3} }

Price weighted index = 1.98359

Thus, the new divisor for the price weighted index = 1.98359

chubhunter [2.5K]3 years ago
6 0

Answer:The New Divisor for the price weighted index = 4.29 (rounded off to two decimals)

Explanation:

Able stock = $93

Baker = $351

Charlie = $74

Price Weighted Index Formula = sum of company share prices/number of companies

Price Weighted Index Formula = ($93 + $351 + $74)/5

Price Weighted Index = $425/5 = $85

The Price Weighted index before share split = $85 and the divisor is 5

Calculating the New Divisor for the Price weighted index

Let The new divisor for the price weighted index be α

Price of Barker stock after sare split = $351 x 1/2 = $175.5

Price Weighted Index = 85

Price Weighted Index= ($93 + $175.5 + $74)/α = $85

($93 + $175.5 + $74)/α = $85

cross multiply

$85α = ($93 + $175.5 + $74)

$85α = $342.5

α = $342.5/$85 = 4.29411765

α = 4.29

The New Divisor for the price weighted index = 4.29 (rounded off to two decimals)

   

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b. the supply of ivory has fallen, leading to an increase in price and reward for poaching.

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An investor deposits 50 in an investment account on January 1. The following summarizes the activity in the account during the y
ANTONII [103]

Answer:

236.25

Explanation:

Calculation to determine X

First step is to calculate the 6 months Yield

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1 year yield=(40/50) (80/60) (175/160) (x/250)-1

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