1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Anna71 [15]
3 years ago
9

A benchmark market value index is comprised of three stocks. yesterday the three stocks were priced at $12, $20, and $60. the nu

mber of outstanding shares for each is 600,000 shares, 500,000 shares, and 200,000 shares, respectively. if the stock prices changed to $16, $18, and $62 today respectively, what is the 1-day rate of return on the index?
Business
1 answer:
Olenka [21]3 years ago
8 0

Answer: The one day rate of return on the stock is 1.49%

We arrive at the answer in the following manner:

First we need to calculate yesterday's and today's index values.

For that we need to find weights of each day based on market capitalization.

Market Capitalization _{ a stock} = Market Price * No .of outstanding shares

The weight of a company in the index is calculated by dividing the market capitalization  of a company by the total market capitalization of all the companies whose shares are a part of the index.

Weight_{Company A} =\frac{Mkt Cap of company A}{Total Market cap}

Then, we multiply the share price of each company with their respective weights and find the total to arrive at the index value for one day.

<u>Yesterday's Index Value</u>

Stock        Price         No. of shares      Mkt Cap  Weight  Weight*Price

A               12               600000        7200000      0.25      2.96 (0.25*12)    

B               20               500000       10000000    0.34      6.85(0.34*20)

C               60               200000       <u>12000000</u>     <u>0.41</u>      <u>24.66  </u>(0.41*60)

Total                                                 29200000     1.00      34.47

We calculate the weight for stock A as follows:

Weight_{A} =\frac{72,00,000}{2,92,00,000} = 0.2466 = 0.25

We calculate the weights of the remaining stocks in a similar manner.

Please note that the sum total of all weights must add up to 1.

The sum total of the last column (Price * Weight) is yesterday's index value.

We repeat the same steps with today's market price to arrive at today's index value.

<u>Today's index Value</u>

Stock        Price   No. of shares       Mkt Cap     Weight    Weight*Price

A               16               600000       96,00,000     0.31        4.95 (0.31*16)    

B               18               500000       90,00,000     0.29       5.23  (0.29*18)

C               62               200000    <u>1,24,00,000</u>     <u>0.40</u>     <u>24.80</u>(0.40*62)

Total                                                3,10,00,000     1.00     34.98

<u>One-day Rate of Return</u>

We can calculate the one day rate of return on the index as follows:

Rate of return = [\frac{(Today's index value - Yesterday's index value}{Yesterday's index value}) * 100

Rate of Return = ( \frac{34.98 - 34.47}{34.47}) * 100

Rate of return = (\frac{0.51}{34.47}) *100

Rate of return = 0.01494 or 1.49%

You might be interested in
Mr. Smith, the special education teacher, called Tim's parents to schedule a meeting to update information on Tim's progress on
topjm [15]

Answer:

b

Explanation:

ebbbbdbjdbvbksb jbejbkgbksn

7 0
1 year ago
A large St. Louis feed mill, Robert Orwig Processing, prepares its 6-month aggregate plan by forecasting demand for 50-pound bag
xz_007 [3.2K]

From the production plan, the budget for January is $12800, February, $16250, March $17175, April $20875, May $16900, and June $16900.

Production planning simply means the act of designing a guide for the production of a particular good or service.

It should be noted that production planning is important to ensure that all necessary preparation is completed before the start of a production cycle.

Learn more about production on:

brainly.com/question/4139284

3 0
2 years ago
Much of the supply of ________________ is from china and india where chemical manufacturers have less government oversight.
Eva8 [605]
The answer in the space provided is 'coming from'. It is because the countries like China and India has government which has less over sight which enables them to transport goods from chemical manufacturers because of their government that are not that strict in terms of transporting goods to other countries compared to others countries that have more over sight and are more strict.
7 0
3 years ago
Select all that apply.
Semenov [28]

Answer:

Wildlife conservationists.

Explanation:

Wildlife conservationists are those people who do the practice of protecting wild species and their habitats to prevent species from going extinct. If anyone wants to make a career in Agriculture, Food & Natural Resources, he/she must have to know which species are endangered now and which species might be endangered in the future. Along with this, they must have to understand how those species could be saved from being extinct. After knowing all of these, he/she might select their career as a wildlife conservationist. Among the other three professions which are said in question aren't possible to choose from the side of a person who knows Agriculture, Food & Natural Resources.

7 0
3 years ago
Read 2 more answers
If you borrow $5,400 at $800 interest for one year, what is your effective interest rate for the following payment plans? (Input
asambeis [7]
5400/800 = 0,14814 -> 14,81% Interest rate
4 0
2 years ago
Other questions:
  • Gerhard Company sponsors a defined benefit pension plan. At the end of the current fiscal year, the related pension plan assets
    14·1 answer
  • In the long term, the elasticity of supply is affected most by
    6·1 answer
  • A stock is expected to pay a dividend of $0.5 at the end of the year (D1=0.5), and it should continue to grow at a constant rate
    9·2 answers
  • The best description of a strong leader is someone who?
    12·2 answers
  • Total revenue is: a. the price effect times the quantity effect. b. the price of a good times the quantity of the good that is s
    13·2 answers
  • Consider the optimal consumption bundle for a consumer who is choosing between two goods, x and z, which she considers perfectly
    7·1 answer
  • At December 31, 2018, the financial statements of Hollingsworth Industries included the following: Net income for 2018 $ 590 mil
    13·1 answer
  • You are an economic consultant and have been contacted by an official from a developing country. She tells you that her country’
    5·1 answer
  • Trickle irrigation can be used to reduce
    5·1 answer
  • According to the text, reducing many of the tariffs that are still in existence will lead to Blank______.
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!