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
Suppose the cost per hour incurred in operating a cruise ship is 3a + bv3 dollars per hour, where a and b are positive constants
Airida [17]

Answer:

Suppose the cost per hour incurred in operating a cruise ship is 3a + b v^{2}dollars per hour, where a and b are positive constants and v is the ship's speed in miles per hour. At what speed (in miles per hour) should the ship be operated between two ports, at a distance D miles apart, to minimize the cost? (Hint: Minimize the cost, not the cost per hour.)

<em>The speed at which the ship would maximize cost is </em>\sqrt[3]{\frac{3a}{2b} }

Explanation:

The problem can be solved using differentiation to get the minimum value of the speed to travel between the two ports. Step by step calculation is contained in the attached images;

3 0
3 years ago
The salesperson who is responsible for ongoing business with a customer who uses a product, satisfying their long-term needs and
yan [13]

Answer: Account manager

Explanation: The account manager is that salesman of a company who is responsible for managing sales and relationship with particular customers of the company. The account manager is assigned accounts of customers of which he has to maintain relationships with.

The main focus of account manager is to manage sales with customers and identify new business opportunities if any.

Thus, Account manager is the right answer for the given case.

5 0
3 years ago
Practice
Anettt [7]

If the special order for 3,000 boxes of crystal glassware is accepted, the effect on the net income of Harvest, Inc. is an increase of <u>$12,000</u>.

<h3>What is break-even analysis?</h3>

Break-even analysis is an accounting technique to ensure that a company does not incur losses from its transactions.

Using the technique, a corporation ensures that the total costs are at least equal to the total revenue or the contribution margin is sufficient to cover the fixed costs, which are not variable within a relevant range.

The technique is based on the concepts of contribution margin and variable costing.

<h3>Data and Calculations:</h3>

Special order units = 3,000 boxes

Price per box for special order = $30

Variable costs per box = $24

Special shipping costs per box for the special order = $2

Contribution margin per box = $4 ($30 - $24 - $2)

Total Contribution Margin = $12,000 ($4 x 3,000)

Fixed costs = $30,000 ($10 x 3,000)

Normall selling price per box = $70

Thus, if the special order for 3,000 boxes of crystal glassware is accepted, the effect on the net income of Harvest, Inc. is an increase of <u>$12,000</u>.

Learn more about accepting special orders at brainly.com/question/25307534

4 0
2 years ago
Ordinary repairs meet all of the following criteria except: Multiple Choice Are expenditures to keep an asset in good operating
spin [16.1K]

Answer:

The correct answer is letter "B": Extend the useful life of an asset beyond its original estimate by several years.

Explanation:

Ordinary repairs refer to routine maintenance that equipment and machinery need to work over its estimated useful life. <em>It does not aim to extend the life of the equipment but helps meeting the estimated time a company plans to use those assets.</em> In accounting terms, ordinary repairs demand to record a debit to an expense account and a credit to a cash account.

7 0
3 years ago
Future changes in automobile technology are likely to include
s2008m [1.1K]

Answer:    Flying cars??

Explanation: Im 99.9% sure it will happen.

8 0
3 years ago
Other questions:
  • zyDE 8.14.1: Iterating over a dictionary example: Gradebook statistics. Write a program that uses the keys(), values(), and/or i
    15·1 answer
  • The Fans Store, a retail outlet for fans and air conditioners, increased its advertising during the recent unusually hot summer
    9·1 answer
  • Donielle opened a revolving line of credit with a $4,000 credit limit. How much does she
    6·2 answers
  • Liquor stores in Tennessee lobby the state legislature, asking that wine shipments from out-of-state be made illegal. They argue
    11·1 answer
  • If I have a half circle how many degrees are they?
    11·1 answer
  • The Davises pay the annual property tax of $1,825 on their lake house every January. On a whim, they sell the lake house to the
    9·1 answer
  • According to the video, what do many Accountants and Auditors decide to do?
    14·1 answer
  • Which of the following is not a benefit of marriage, according to the U.S. Department of Health and Human Services?
    14·1 answer
  • Changes in the quality of a good a. present a problem in the construction of the consumer price index, and that problem is somet
    5·1 answer
  • risk unique to firms with direct investment in a foreign country is the potential takeover of the firm's assets by the governmen
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!